Secured pension lending for experienced property investors

Secured pension lending for experienced property investors

Whether a current business owner, or an experienced investor, looking for new ways to invest your funds and equity can be exceptionally beneficial, particularly as you begin to age. For some, investing in a commercial property through your pension fund can provide a whole new way to borrow and invest, in order to preserve capital suitable for use with other opportunities. As we age, this becomes particularly important, as we look for fast returns, and the ability to secure assets which are suitable to pass down. Here, we’re taking a closer look at what secured pension lending is and the benefits it can offer.

What Is Secured Pension Lending?

There are a number of lending services which can provide businesses and individuals with access to funds quickly and efficiently, secured against certain assets. For example, a property developer may opt for bridging loans in order to purchase a property at auction, and redevelop the property, with the loan being secured against the project itself. However, as traditional lending criteria continues to tighten drastically, new ventures are coming to light, with secured pension lending being one of the latest introductions to the market. Secured pension lending is where a director of a company requests a small business loan held against their pension scheme. These types of loans can offer funds from £50,000 all the way up to millions. Secured pension lending is also attributed to SSAS pensions, and this is set up under a Trustee system.

Small Self-Administered Scheme Pensions

These particular pension options are often set up by directors of businesses who are looking to have much more control over the decisions made in relation to their funds. Generally, those who opt for an SSAS pension will use their funds to invest in the business itself. There are a broad number of benefits to opening a small self-administered scheme pension, with flexibility and greater control often being the two most important. With greater choice over where assets are invested, SSAS pensions can enjoy borrowing money for investment purposes, for their business. For example, an SSAS holder may purchase the trading premises that their business is trading on, and lease it back to the company, as an additional form of funding. There are a number of investment options that an SSAS and secured pension holder may want to consider, which we explore in more detail below.

Investment Options

There are a broad range of things to invest in using secured pension lending. With the flexibility and control offered by secured pension lending, in particular with SSAS pensions, mature and experienced investors can look at a number of alternatives. Generally, these alternatives will include, property, property bonds, land and commercial property, and offering their pension as a loan, mainly to businesses, can be beneficial.

Most standard pension funds will offer the opportunity to invest in typical stocks and shares. Other options include government gilts with fixed interest securities, corporate bonds, foreign equities, authorised unit trusts, hedge funds, unit trusts, gold, and commercial loans. Existing or frozen pension funds are able to be used as part of this investment and lending option.

As you can see, there are a broad number of opportunities presented when opting for secured pension lending, but with main benefits of flexibility and greater control, they are becoming a promising option for many.