Posted on: 29th May, 2004 02:57 am
Pension Mortgage is a kind of interest only mortgage, which is backed by a pension plan. It consists of:
In this type of mortgage, the borrower plans to use some or all of the cash lump sum, from a pension policy, to repay the mortgage at the end of the term.
For Example, Peter has taken a mortgage of $200,000 at 9% rate of interest for some personal reasons. He would pay $500 a month to the lender and $300 a month into a pension fund. The proceeds of the pension policy will help him to repay his mortgage debt after his retirement. This is known as pension mortgage.
- Monthly interest payments to the lender.
- Payment of premiums into the pension fund.
In this type of mortgage, the borrower plans to use some or all of the cash lump sum, from a pension policy, to repay the mortgage at the end of the term.
For Example, Peter has taken a mortgage of $200,000 at 9% rate of interest for some personal reasons. He would pay $500 a month to the lender and $300 a month into a pension fund. The proceeds of the pension policy will help him to repay his mortgage debt after his retirement. This is known as pension mortgage.
I retire in 5 years from my Federal job but the home I want is available now. It is a family home on the the California coast. My elderly mother can no longer afford to keep it but I always hoped to be able to retire in this home. I currently live in Southern CA. The home is on the Oregon/California border. I would need to continue renting in our current location for the next 5 years so need low monthly payments. This makes the pension/interest only loan interesting.