At retirement the pension fund can provide a pension and a tax-free cash sum. On the assumption that fund performance meets targeted growth rates and that the required contributions have been made, it is anticipated that this tax free cash sum will be sufficient to repay the loan, although this is not guaranteed.

It may be possible to include a Waiver of Premium option whereby the life office would pay the policy premiums for you (after a specific period) if you were unable to work through long term illness. This may change after 6 April 2001.

It should be noted that in conjunction with the Pension Mortgage, a suitable Term Assurance/Critical Illness policy would be required to protect the loan.

There are several types of pension arrangements against which loans can be made; the most common used being the Personal Pension Plan. Please note, however, that this method is only applicable to those eligible, i.e. the self-employed or people in non- pensionable employment receiving eligible earnings. Pensions can be arranged on a With Profit, Unit-Linked or unitised With Profits basis giving a wide choice to suit borrowers with different risk profiles. Ultimately, the amount of tax-free cash available at retirement is dependent upon the investment performance of the selected pension provider.

1. At present the net cost of your contributions to the Pension Plan is reduced by 40% and 22% for higher and basic rate taxpayers respectively.
2. Your contributions will grow in a tax-exempt fund.
3. Although your tax-free cash will be used to repay the loan, your residual fund will be used to purchase a pension for you.

1. You may have to cease your pension contributions and rearrange your mortgage if you change your employment status and are no longer eligible to contribute.
2. The loan term must end between the ages of 50 and 75, unless the Inland Revenue approves the borrower's occupation for earlier retirement.
3. You are using up to 25% of your pension fund to repay the loan.
4. There may be a restriction on the percentage of earnings that can be paid to the pension in any one year.