LONDON (Citywire) - HBOS has launched a loan product that allows high net worth SIPP holders to boost their existing SIPP investments.
Bob Stitt, pension lending specialist at HBOS, said the Pension Share Accelerator is an equity-release-style product that will enable SIPP holders to pay themselves a lump sum from the SIPP on retirement, buy a property within a SIPP or make further investments under the wrapper.
The aim of the Pension Share Accelerator product is to raise capital on the strength of eligible investments held within a SIPP.
In line with post A-Day regulations, SIPP holders can borrow up to 50 percent of the value of their fund, provided they have a minimum of 200,000 pounds already invested in the SIPP.
Eligible investments, which include stock market investments, gilts, OEICs and investment trusts, must be kept at 150 percent of the value of the loan to provide security against the loan.
Loans can be taken between 100,000 and 750,000 pounds over a seven-year period on an interest-only basis.
The interest charged for the loan will be 1.5 percent to 2.0 percent over the base rate, which is currently 5.5 percent.
Initial commission is available at 0.2 percent and there is an arrangement fee of 1 percent of the loan at a minimum of 750 pounds.
Stitt said: “This is the first product offering a gearing facility for a SIPP.”
The product was launched via email to the IFA market in June.
But Neil Shillito, director of Norwich-based SG Wealth Management, said: “In a word we’re a bit suspicious. We think that it’s in effect taking the mickey out of all the rules.
“It will be very quickly shut down in our opinion.”
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