Mortgages for self invested personal pensions (SIPP’s)

A SIPP can buy and hold commercial property in a very tax efficient manner. Advocate Finance are not SIPP managers or trustees, so any technical questions on the relevent tax rules or what type of commercial property can be held in a SIPP are best directed to a SIPP manager / trustee.

What we can do is to arrange a mortgage for the SIPP in the same way we arrange commercial and investment mortgages for any of our customers.  If you are considering using a SIPP 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 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
• The mortgage lender views the transaction as a commercial investment mortgage and the same factors apply
• The quality of the property is very important because the lender has no other security but the property

You can see that it can be fairly complicated but please contact us for a FREE assessment if you would like to talk through any questions o1206 544333

Contact us for more information.