Pension Plan Mortgages
This is a type of interest only mortgage where the loan is designed to be repaid by a lump sum from a pension plan on retirement. If you have a personal pension, you can link your mortgage loan to a pension plan. At the end of the mortgage term, part of the tax-free proceeds (the tax free lump sum) of the pension fund is used to repay the capital outstanding.
It is worth noting however, that a pension plan mortgage will reduce the amount available to providing you with a pension in retirement. However, tax relief is available on your pension plan contributions. Having paid off your mortgage with your pension fund, the remainder of your pot of money will then be used to provide you with retirement income via an annuity.