There was a boost for the secured loans sector last week with the launch of lender Portal Portfolio, which uses pensions to fund its loans.
The lender is targeting those with a self-invested personal pension looking for a secured loan. Portal is offering loans up to £75,000, with rates from 9.9% up to 80% LTV for the employed or self-employed.
The pension and loan will not be linked as the loan is secured against the borrower’s property, not the pension.
Initially, the loans will be offered exclusively through All Types of Mortgages and brokers will receive 4% of the loan in commission for referrals.
Mortgage brokers wanting to recommend the secured loan but who are not qualified to offer pension or investment advice can hand over the regulated aspects to a specialist pension IFA.
But Mark Clinton, director at MD Financial Solutions, says he would not be keen to recommend the product.
He says: “You shouldn’t mix apples and pears and the two prod-ucts should be kept separate. You shouldn’t choose a pension purely because it is the only way to get a secured loan.”
Tim Moore, managing director of Portal Portfolio, says: “It won’t be appropriate for everyone, but it will be attractive to those with sizeable investments in their pension, who are also looking to borrow money for anything from commercial reasons to home improvements.”