Pension Mortgage

S

sidb

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Hi

I am looking for advice for father in law. He took out a pension mortgage 10 years ago and had 90k in pension and bought a apartment for 190k. It’s a interest only repayment and when asked for balance it’s shows he owes bank 100k. He got letter to say PTSB are selling his loan to vulture fund. Can someone explain this mortgage roughly. He has rang bank before and has seriously buried his head in the sand with this. I understand it’s not a whole lot of information here but if you guys could try provide myself with information on pension mortgage and what he would owe on these figures etc. if he sold it does he only need to pay back 100k and does he keep the remaining funds etc. apologies for lack of info but stupidly refuses to get financial help on this.
 
If it's a pension mortgage, it's his pension fund that owes the money, and owns the property.

So if it was sold for 190k, the bank would get their 100k, and his pension fund would be left with 90k.

Because there's a pension involved, he really should get advice.
 
Thanks Redonion. He is booked in for next week for advice but trying to get the basics first.
 
RedOnion said:
If it's a pension mortgage, it's his pension fund that owes the money, and owns the property.

So if it was sold for 190k, the bank would get their 100k, and his pension fund would be left with 90k.

Because there's a pension involved, he really should get advice.
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I’m not sure that’s correct.

As far as I know, pension mortgages are arrangements where the individual owns the assets and borrows the money, and the exit is by way of the loan being cleared with pension monies.
 
Gordon Gekko said:
I’m not sure that’s correct.

As far as I know, pension mortgages are arrangements where the individual owns the assets and borrows the money, and the exit is by way of the loan being cleared with pension monies.
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Ah, indeed. All the more reason to get advice! It looks like there were different ways this could have been done.

I've seen loans where the pension fund was the borrower on the books of another bank and jumped to conclusion they were the same thing, but you are correct, there were structures set up with the intent that borrower could use their lump sum from pension to clear the mortgage. So they were borrowing on the strength of their pension rather than within a pension structure.

@sidb I might have made the wrong assumption regarding the structure. Gordon is correct in what a 'pension mortgage' product was. I assumed it was within a pension structure based on the fact he didn't have to birrbo the amount he already had in pension.
The first thing to establish is what exactly he has.
 
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Sidb

You really need to provide more information here.

"He" bought an apartment for €190k when he had €90 in his pension fund. It was interest only and he still owes the bank €100k.

This strongly suggests that the pension fund bought the property using its €90k as a deposit. This would also be the most common use of the term pension mortgage.

If it's interest only and he still owes €100k, then that means that he is paying the interest and so is not in arrears.

What is he worried about? He probably has a cheap tracker.

He should speak to the broker who set up the mortgage for him.

There should also be a pension company or pensioneer trustee behind this.

Brendan
 
Hi Brendan,

Pension mortgages are actually slightly different.

An individual buys an asset in his/her own name, typically pays interest only, and then the principal is repaid by way of a lump sum from his/her pension fund.

“Pension mortgage” is arguably a misnomer.

All the best,

Gordon
 
Hi Gordon

It could be either. I would have thought that the term pension mortgage applied to where a person buys a property in the pension fund.
Of course it could be an interest only loan in the borrowers name but until we hear further, we won't know.


Brendan
 
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