Lib Dems propose pension-from-property scheme

Nick Clegg has announced a Liberal Democrat proposal to introduce a 'pension-from-property' scheme which would allow parents and grandparents of first-time buyers to use a portion of their pension to guarantee a mortgage.

Mr Clegg believes the scheme will improve the chances of first time buyers and other home purchasers getting on the property ladder by overcoming the largest hurdle of all - the deposit. There has been an increase in the number of would-be purchasers turning to family members for financial assistance, and while many don't have access to the sums of cash necessary to help put up a deposit, many do have a pension pot which the Liberal Democrats believe should be available to be offered up as  security.

The scheme would allow pension holders to separate off a lump sum from their pension pot, and use it to guarantee the mortgage on behalf of their children or grand-children. If the borrower goes into arrears the allotted amount from the pension would be at risk, but the remainder of the pension fund cannot be touched by the Lender. 

Ros Altmann, director general of Saga, which lobbies on behalf of over-50s, voiced concerns at the dangers of borrowing against a future lump sum. The big question is whether it is viable for a lump sum to be set aside from a pension pot without then compromising the ability of the pension holder to live comfortably in their retirement.

If you are purchasing, selling or remortgaging a property in Northern Ireland, or require other property related advice, including the implications of being a guarantor for a mortgage, contact one of the residential property conveyancing solicitors at Wilson Nesbitt by calling 0800 840 9290. Or for more information on the property services offered by the firm click here.