How a Small Self Administered Scheme helps 1st Time Buyers

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) March 18, 2011 -- Pension Practitioner administer small self administered schemes (SSAS), an employer based occupational pension scheme. Pension Practitioner .Com are always coming up with innovative solutions to help their clients run a more tax efficient, profitable pension.

A small self administered pension scheme can be used in a variety of ways to transact with a business, which is usually the business of the members of the pension scheme. The following is an example of how a SSAS can be used to help your children purchase their first home.

The current low level of interest rates have made it slightly more affordable for first-time buyers to get on the property ladder by way of lower interest payments on their mortgage. However, it is still extremely difficult, especially for young people, to buy their first home. Banks who are willing to give a mortgage on the basis of a 10% deposit charge punitive interest rates and conditions. Most lenders require a deposit of 25% or higher.

Parents who are keen to help their children with this problem, may find they are able to do so if they have a small self administered scheme (SSAS). Instead of relying on a bank to obtain financing for the purchase of a home, under their terms and conditions, it is possible to use ones pension to loan the shortfall in capital needed and repay the interest to the SSAS very tax efficiently.

If you have sufficient funds in your pension, you can loan half the amount to your company, which may use the money to loan onto the director (who's offspring needs the deposit), via the director's loan account. The interest payments are set by the pension scheme, provided interest is at least one percent above the base rate. It is therefore possible to lend money at a rate of 1.5% using the current base rate of 0.5%. The loan must have a term of no more than five years, but can be rolled over once for an additional term of no more than five further years. Tax relief is also received on the interest payments to the pension scheme plus to ensure the SSAS does not face a loss, a first charge on an asset of equal value is made.

Pension Practitioner .Com is one of the most innovative administrators for SSAS, they have produced a free fact sheet on how this works in detail in conjunction with a leading firm of tax advisors. To get this free guide freephone 0800 634 4862.

finance     financial planning     investing     pension scheme     SIPP     SSAS