|
You may not have enough money in your Fund to pay for your chosen property. One
solution to this could be for a Bank or other Lender to make a loan to your
Fund. Because L&C Pensions holds your Fund as Scheme Administrator this
means that the loan would be made to L&C Pensions or its
nominee.
Limited recourse loan
The Lender will have a charge against the property as security for the loan.
However, The Fiduciary Corporation Limited will not itself guarantee the loan
and will not agree to any loan terms which would allow the Lender to sue L&C Pensions or to be able to make claims against any of our
assets apart from the property.
Prospective Lenders must therefore be told that any loan must be on the basis
of "limited recourse". Appendix 2 is a note which should be given to a possible
Lender to explain the details.
N.B.
A loan will not be acceptable if one of its terms would be a guarantee from you
or from someone connected with you.
You choose the Lender
If a loan will be needed it is for you to choose a Lender and obtain an offer
in principle. This should then be sent to L&C Pensions with your completed Proposed
Property Purchase Form or as soon as possible thereafter.
Please note that Lenders generally require a valuation. L&C Pensions also require a valuation and an inspection report. Assuming
that the same valuers are to be used, we recommend that you ensure that the
inspections for both reports are carried out simultaneously in order to
minimise costs. This may mean asking the Lender not to give instructions for
their valuation to be carried out until we are able to give instructions for
the report which we need or vice versa.
Maximum loan
50% of your Net Sipp fund value.
In addition L&C Pensions will require that the loan is
capable of being serviced in full - with an additional 10% margin - from the
rental income, unless we are satisfied that the loan is viable, perhaps because
the Fund has other assets or income.
We recommend that you consider the possibility of an increase in the payments
required by the Lender if interest rates rise. If this should happen and there
was then insufficient rental income to cover the outgoing payments then the
Lender may force a sale of the property. This risk would be reduced if at the
outset you allowed a greater margin between the amount of the rent and the
amount of the loan service or if there were other assets in the Fund which
could be drawn on to meet any future shortfall.
|