Should i pause my AVCs

W

worried505

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Hi
I am 44 years old with 170k in my pension pot, i earn a good salary which is around 100k so i can afford to pay the max avc into my pension which i have been doing for the last while

however a divorce is possible in the intermediate term and i will likely need to buy another house. My issue is that i have health issues and would prob struggle to get mortgage protection.

My question is and i know its subjective but would it be best to stop my avcs and build up a large cash position ( i have 110k cash already ) so i could possible buy an apartment for cash in the event of a divorce ? Or would it be better to continue with my avcs and if the divorce happens then i could try and get a mortgage

I just hate the thought of having to enter the rental market and pay 2k for a house rental , an apartment in my area would be around 190k so i could build up that cash position in maybe 5 years

I understand its anxiety that is making me think like this but i suppose i just want to protect myself
 
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Remember that as part of a divorce settlement, your spouse may get a percentage of your pension fund and/or a percentage of your savings.

Before making the decision, are you sure that you wouldn't get Mortgage Protection cover? Some people assume that an illness may preclude them from getting cover at all. Depending on the nature and severity of the illness, they might be wrong in that assumption. Maybe you would get cover, perhaps with an additional premium. But the premium for you for a small mortgage won't be large anyway, so even a loading of +100% won't break the bank. I think this one would be worth getting certainty on first, as it has an impact on your options. Can you give details of the health issues here?

Regards,

Liam
www.FergA.com
 
LDFerguson said:
Remember that as part of a divorce settlement, your spouse may get a percentage of your pension fund and/or a percentage of your savings.

Before making the decision, are you sure that you wouldn't get Mortgage Protection cover? Some people assume that an illness may preclude them from getting cover at all. Depending on the nature and severity of the illness, they might be wrong in that assumption. Maybe you would get cover, perhaps with an additional premium. But the premium for you for a small mortgage won't be large anyway, so even a loading of +100% won't break the bank. I think this one would be worth getting certainty on first, as it has an impact on your options. Can you give details of the health issues here?

Regards,

Liam
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yeah sure i can. Mental health (anxiety) , medicated for this and never missed work or had no hospital stay.

Stage 1 of a very treatable cancer , treatment finished 3 years ago but i cannot say 100% for sure i wont ever need treatment in the future but i have a normal life expectancy

I could get protection maybe but i mean if i didnt , then i could end up paying 2k a month rent and not being able to max my avcs anyway.

My wife has her own pension so i doubt she would look for or get any of mine as hers is a gold plated PS one .

Im just wracked with indecision on this and i keep changing my mind

Another item to consider i think is that lets say the divorce did happen in a few years , its possible that i could rent for a bit and then cash in my old pension when i turn 50 (pay income tax to draw it all down) and then be able to buy an apartment then

Or else i could save up the 100k now over next 5 years and go back to maxing avcs then again
 
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Based on your post, I'd say that you would be able to get life insurance cover with a loading on the premium.

Cashing in the pension at 50 would be very expensive assuming you're still earning your salary at the same time. You'd lose over half of the taxable portion of the pension to tax. I'd leave that one as a last resort only.
 
LDFerguson said:
Based on your post, I'd say that you would be able to get life insurance cover with a loading on the premium.

Cashing in the pension at 50 would be very expensive assuming you're still earning your salary at the same time. You'd lose over half of the taxable portion of the pension to tax. I'd leave that one as a last resort only.
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Yes it would be a last resort but at least it's an option

Thanks for your comments. Are banks more willing to give a waiver for mortgage protection if the LTV is low? As in less than 50%
 
worried505 said:
I could get protection maybe but i mean if i didnt , then i could end up paying 2k a month rent and not being able to max my avcs anyway.
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Just approach a broker saying you are looking for cover and go through the application process to see what is expected and what conditions might apply.

You don’t have to take out the life insurance if approved.
 
Worth checking whether you can transfer/re-assign the existing life policy (with your spouse's cover removed) to your new mortgage provider, if spouse is agreeable and it's easier for them to get a new policy.
 
Thanks all , i think im going to stick with maxing the pension contributions and if the divorce happens then i will deal with it then. No point in making a financial decision now for something that may not happen
 
Depending on how things are split and how the finances are on either side, if kids are involved and if you were a stay at home dad for a period of time, you could actually get a % of her pension pot, gold plated or not.
 
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