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Pension plan

The mortgage definition for Pension plan:

An investment plan which can provide a lump sum on and an income after retirement. A pension plan is sometimes used as a way of providing a lump sum to repay the capital of an interest only mortgage.

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Pension mortgage

Pension mortgage
A type of interest-only mortgage where your mortgage payments are combined with payments into your personal pension fund. This is designed to mature on your retirement, so the mortgage loan term must end between the ages of 50 and 75 unless the borrower is in an industry where the Inland Revenue permits earlier retirement. The pension also needs to provide you with an income during retirement, so only twenty five percent of the pension fund can be taken as a lump sum to pay of your mortgage.

Personal pension

Personal pension
A structured personal savings and investment plan to provide for your financial needs after you retire. You can use some or all of the proceeds from a personal pension to pay off an interest-only mortgage. You will need to arrange life assurance separately to a personal pension.

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