BORROWING TO FUND A

PENSION PROPERTY

WHAT IS PENSION BORROWING TO FUND A PENSION PROPERTY?

Enthusiasm for lending to self-directed pensions is back. Banks are now making loans to pensions again. The pension structure can borrow up to 50% of the pension property value on a capital and interest basis. The term is usually 15 years.

WHAT IS THE CAPITAL AND INVESTMENT SCHEDULE?

Repayments are on a full capital and investment schedule.

Repayment term – maximum of 15 years.
Interest only loans to pensions are forbidden under Revenue rules and regulations.
The term of the loan will need to at least match the unexpired term of the lease on the target property.

WHAT TYPE OF LOAN SECURITY IS REQUIRED?

Pension borrowing is always granted on a limited basis. This means that in case of default, the lender cannot pursue the assets of the trustees or the pension scheme participant.
When the property is the only asset provided as security for the loan, a lender requires a rental yield that is enough to meet capital and interest loan repayments.

PENSION (UNIT TRUST)

Buy-To-Let mortgage features & benefits:

Non-recourse lending
15 year Capital and Interest Repayment option
Up to 50% Loan to value
Minimum loan size €40,000 – up to €500,000
Term up to 15 years
Minimum property value €80,000 with no maximum property value*
– *Lenders will have different criteria

BORROW TO FUND A PENSION PROPERTY?

You can indeed borrow to help fund the purchase of your property, but there are certain things you need to know because the loan must comply with certain rules including:

Banks currently looking at commercial property with strong lease covenant and residential property in urban areas (10,000+ population)
Limited Recourse
Maximum loan term of 15 years or NRA if sooner
The pension scheme cannot borrow retrospectively
Subject to bank’s lending criteria