Latest News

Investing in a Pension or Buy to Let Property?

03rd October 2017

Planning for your future is important. In fact, making a plan for later life is becoming not only prudent, but essential. With government cuts to social care, increased cost of living, rising inflation and changes to the amount paid out from the basic state pension, getting old has suddenly become very expensive.

So, the question often asked is should I invest in a pension or buy an investment (Buy To Let property)?

Here, we lay out the benefits and risks associated with both pensions and buy-to-let properties.

 

Pensions

Benefits:

• You receive tax relief on your contributions. This is a contribution from the government towards your pension contribution. The tax relief is paid out at your personal rate of income tax. There are limits to the amount you can pay in to the pension annually.
• The fund attracts significant tax advantages as it grows.
• You can take the pension from age 55 and take 25% of the pot as tax free cash.

 

Risks:

• The pension fund may not perform as well as you had hoped as it is predominantly invested in the stock market in shares and the value is not guaranteed.
• You may want access to the whole pot when you retire and although this is possible it will attract a potentially large tax bill(after the 25% tax free cash).

 

Buy-to-let properties

Benefits:

• Investing in property can yield not only income but also capital growth.
• Interest rates on BTL mortgages are very low at present making the financing of the property attractive.

 

Risks:

• Mortgage rates may increase in the future making the property less profitable.
• The tenant may not pay their rent.
• You may have to pay capital gains tax on any capital value increase.

 

If you’re still unsure about what direction to take, why not talk to a member of the IMC team today.

Return to news page
Gold star Gold star Gold star Gold star Gold star
"Our mortgage adviser Andrew Francis is brilliant. When we first met him we were first time buyers with very limited knowledge about the process of buying a first home in the UK. However, Andrew guided us through the process with his vast knowledge and professionalism. We had to recently re- mortgage our flat, Andrew got in touch with us well in advance he presented us with the best options for us and made the whole procedure painless. Of course, we were a lot more relaxed this time around, as we already knew that we are in good hands. Thank you for your help, Andrew!"

Vyara Panayotova , Feb 2020

Independent review from Google
Gold star Gold star Gold star Gold star Gold star
"Always been impressed We've used IMC for over 10 years and have always been impressed with the service. They have helped to guide us through various financial issues we've had and we've been able to make better choices as a result. I wouldn't hesitate to use them again"

SusB , May 2020

Independent review from Yell