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Mortgages for Self Invested Personal Pensions (SIPP’s)SIPP Mortgages

A SIPP can buy and hold commercial property in a very tax efficient manner. Advocate Finance are not SIPP managers or trustees. Any technical questions on the relevent tax rules, or what type of commercial property can be held in a Self invested personal pension, are best directed to a SIPP manager / trustee. But we can help arrange SIPP mortgages and finance.

We can arrange SIPP mortgages in the same way we arrange commercial and investment mortgages for any of our customers.  If you are considering using a Self invested personal pension to hold commercial property you need to understand that the criteria of both the SIPP manager / trustee as well as the mortgage lenders will need to be met.

Requirements of the SIPP manager / trustee.  These can be specific to each manager / trustee but the important points are:

  • The maximum you can borrow for a SIPP mortgage is 50% of the SIPP’s value.  (This is in fact an HMRC rule which the manager / trustee must observe). So if your SIPP had assets of £300,000, it could borrow £150,000.
  • If the SIPP is to take out a mortgage the rent from the property into the SIPP must be greater than 125% of the mortgage payment

Requirements of lenders that provide commercial and investment mortgages to SIPP’s:

  • They will lend up to 75% of the value of the property for a SIPP mortgage.
  • The mortgage lender views the transaction as a commercial investment mortgage . And the same factors apply.
  • The quality of the property is very important as the lender has no other security but the property.

You can see that it can be fairly complicated. Please contact us if you would like to discuss SIPP mortgages and finance.