Question of Finance: SAPS can bolster savvy property investment
QI am a self-employed company director and currently have a company pension. I would like more control over my pension investments and I'm considering using my self-administered pension scheme (SAPS) to invest in property.
Given the current depressed property prices I thought now might be a good time to invest.
AA significant number of financially savvy Irish people are beginning to see value in the property market, particularly where sellers have an urgent need to sell.
In your case the unique flexibility of SAPS is available to you to raise funds. In an otherwise tough banking sector, banks are quite open to lending for such investments as the loan to value tends to be less than 50pc and in many cases, the transaction may clear a substantial debt.
However, this is a complex area, but if you can match an investor such as yourself who is looking to purchase with a seller who urgently needs to shift a property, and combine this with a well motivated bank, then it's a win-win situation for everyone.
If you do need additional funding the assets in your SAPS make lending for property investment an attractive proposal for the banks. In addition, you will also be able to avail of the current low interest rates.
Another benefit of this investment strategy is that the long-term nature of property investments combined with a traditional pension investment strategy fit well.
If, as a pension holder, you choose to buy a property now, when values are relatively low and clear whatever mortgage you need before retirement, you could find yourself bringing a tax- and mortgage-free property into retirement.
- Tommy Nielson, director at Independent Trustee Company.