Financial Advice Referrals: Pensions, Tax and Your Mortgage Decision

Mortgages are what we do, and they are all we do. Some mortgage decisions also depend on a pension, a tax position or what you plan to leave your family, and that part of the answer has to come from a firm that advises on those areas. For our clients that firm is Forseti Wealth Partners, a London practice run by James Harvey and Archie Wilson. Mortgage One is a whole of market mortgage adviser that arranges mortgages only and refers pension, tax and estate planning questions to Forseti Wealth Partners.

Mortgage One advises on and arranges mortgages only. We do not provide pension, investment, tax, inheritance tax or estate planning advice, and nothing on this page is a recommendation on any of those. Where your decision depends on them, we introduce you to Forseti Wealth Partners, who advise on those areas. Any such advice is Forseti's, not ours.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

For a free initial consultation on the mortgage side of your decision, call 01202 155992 or contact Mortgage One.

Overpaying your mortgage: what we can and cannot tell you

We can explain how your mortgage treats an overpayment. Most fixed rate deals allow up to 10 per cent of the balance each year before an early repayment charge, and an overpayment can cut the monthly payment or shorten the term. Whether overpaying beats a pension contribution is not a question we are permitted to answer.

On the mortgage side, the facts worth knowing are what your current deal allows, what the charge would be above that limit, how the lender applies an overpayment, and where the balance will sit against the property value when the deal ends. We can set those out for you from your mortgage offer and the lender's terms.

If keeping access to the money matters, an offset mortgage is a mortgage product we can advise on. Your savings sit alongside the loan and reduce the interest charged while staying available to you.

Comparing an overpayment with a pension contribution brings in tax relief, your tax band now and in retirement, and when the money can be drawn. Those are financial planning questions. Forseti publishes a calculator comparing the two routes, which you can try if you want to overpay the mortgage or weigh the alternative, and Forseti can advise you on the result. Mortgage One cannot.

Helping a child with a deposit: the lender's view and the rest

On the mortgage side, a gifted deposit from a parent is routine. The lender asks for a signed gifted deposit letter confirming the money is a gift, not a loan, and that the parent will have no interest in the property. Whether the gift suits your own finances, and its inheritance tax treatment, are questions for a financial adviser.

If a cash gift is not the route you want, parents can support a child's borrowing through a joint borrower sole proprietor mortgage, where the parent is on the loan but not the title. We advise on that structure and on the child's mortgage. Our guide to using equity to help children buy sets out how lenders treat each route.

The size of the gift, its timing, the inheritance tax position and the effect on your own retirement or care are for Forseti to assess with you before the money moves. We will arrange the child's mortgage around whatever is decided.

Mortgages in later life and pension income

Lenders will lend into retirement. Most set a maximum age at the end of the term, commonly between 70 and 85, and assess state, defined benefit, annuity or drawdown pension income against the repayments. We can tell you which lenders fit your age, term and income. Whether to draw on a pension is a decision for a pensions adviser.

Where a client intends to use a pension lump sum towards a mortgage, for example to repay an interest-only loan at the end of its term, the lender will want to see it documented as the repayment strategy. We handle that side. Our guide to mortgages on pension income explains how each type of pension income is assessed.

Taking money out of a pension changes your retirement income and can change your tax position and what you leave behind. Mortgage One does not advise on any of that. If a mortgage decision depends on it, we introduce you to Forseti first, then structure the mortgage around their advice.

What Forseti Wealth Partners advises on

Forseti covers retirement and pensions, inheritance tax, tax planning, investments, long-term care, estate planning and protection, with planning for business owners as well. Like Mortgage One, Forseti Wealth Partners is an appointed representative of Quilter Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority. Forseti refers mortgage work to Mortgage One, so each firm advises only within its own permissions.

That split is deliberate. We advise on the mortgage and Forseti advises on the money around it. Neither firm gives advice on the other's area, so each part of your plan is handled by the firm that advises on it.

The value of investments and the income from them can fall as well as rise and you may get back less than you invested. Tax treatment depends on individual circumstances and may change. Tax planning, inheritance tax planning and estate planning are not regulated by the Financial Conduct Authority.

How the referral to Forseti works and what it costs

Ask us and we will make the introduction, or contact Forseti directly and say Mortgage One sent you. The first meeting is at Forseti's cost, so you can find out whether their advice fits your plans before committing to anything. We remain your mortgage adviser throughout and take no part in the advice Forseti gives.

Email admin@forsetiwealthpartners.co.uk or visit forsetiwealthpartners.co.uk to arrange it yourself.

You are now departing from the regulatory site of Mortgage One. Neither Mortgage One nor Quilter Financial Planning are responsible for the accuracy of the information contained within the linked site.

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The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you'd like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.

FAQs

1. Does Mortgage One give pension, investment or tax advice?

Mortgage One gives mortgage advice only. We do not advise on pensions, investments, tax, inheritance tax or estate planning. Where a mortgage decision depends on one of those, we introduce you to Forseti Wealth Partners, who advise on them, and we stay responsible for the mortgage advice alone.

2. Should I overpay my mortgage or pay into a pension?

Mortgage One cannot answer that for you, because the answer depends on pension and tax advice we are not permitted to give. What we can do is explain how your mortgage treats an overpayment, including the annual allowance before a charge applies. Forseti Wealth Partners can advise on the pension side and on the comparison.

3. Can I use my pension to pay off my mortgage?

Lenders will accept a documented pension lump sum as a repayment strategy, and we can explain how your lender treats it. Whether you should draw the money is a pensions decision with tax and retirement consequences, and Mortgage One does not advise on it. We will introduce you to Forseti Wealth Partners for that advice.

4. What does a lender need if my parents gift me a deposit?

A signed gifted deposit letter confirming the money is a gift, not a loan, and that your parents will have no interest in the property, plus evidence of where the funds came from. Mortgage One handles the mortgage side. Any inheritance tax question about the gift is for your parents to take to a financial adviser.

5. Do I have to pay for the first meeting with Forseti?

No. The first meeting is at Forseti's cost. You can ask Mortgage One to make the introduction, or contact Forseti directly at admin@forsetiwealthpartners.co.uk and say Mortgage One sent you. Any fees after that first meeting are agreed between you and Forseti, and Mortgage One takes no part in that advice.

6. Can Mortgage One arrange the mortgage while Forseti advises on my pension?

Yes. The two run alongside each other. Forseti advises on the pension, tax or estate planning question and Mortgage One advises on and arranges the mortgage, timing it around Forseti's advice where the two depend on each other. Each firm advises only within its own permissions, and you deal with a named adviser at both.