A mortgage in which the borrower repays interest only and also contributes to a pension plan designed to provide an eventual tax-free lump sum, part of which is used to repay the capital at the end of the mortgage period and the rest to provide a pension for the borrower's retirement.
Although similar to endowment mortgages, a pension plan backs a pension mortgage instead of an endowment policy.
The capital is eventually paid back through capital appreciation or an endowment / pension mortgage policy.
You can either pay a little at a time as you go (repayment mortgage) or pay it all off at the end (pension mortgages).
Acquiring property through a pension vehicle has been possible for several years but was usually confined to self-employed professionals and others who might, for example, have acquired their business premises via a pension mortgage.
The self-employed can also use a personal pension to fund a pension mortgage; the tax advantages are very significant.