Yes, you may be able to use your pension to get a mortgage, even if you have not started taking money from it. Some lenders count a set percentage of an undrawn SIPP or pension pot as income, others accept income you already draw from it, and some will not use drawdown income at all. The lender you choose decides how much of your pension counts.
Key takeaway: Pensions already being paid, such as the State Pension, final salary pensions and annuities, are widely accepted by lenders. Undrawn pots and drawdown income are a specialist area where lenders differ sharply, so the same pension can support very different borrowing from one lender to the next.
[[stats: 4% to 5% = Of an undrawn pot's value some lenders count as yearly income | 57 = Minimum age to access most pensions from 6 April 2028, up from 55 | 90+ = Lenders compared by Quanstrom Financial]]
Can you use your pension to get a mortgage?
You can, subject to criteria. Pension income is one of the most widely accepted types of income for a mortgage once it is being paid to you. Where it gets more complicated is a pension you have not started drawing, or one you take flexible withdrawals from, because each lender has its own rules for turning a pot into an income figure.
This guide is about using a pension as income for a residential mortgage, as a deposit, or to repay an interest-only mortgage. It is not about using a SIPP to buy commercial property, which is sometimes also called a SIPP mortgage, and it is not about drawdown lifetime mortgages, which are a form of equity release. If your main question is about age limits, our guide to mortgages for over 50s, 60s and 70s covers them lender by lender.
Which types of pension income can count?
Lenders treat a pension very differently depending on whether it is already paying you a fixed income, paying you flexible withdrawals, or not yet being drawn at all.
[[table: Type of pension | What it is | How lenders tend to treat it ;; State Pension | The regular pension paid by the government | Widely accepted, often at 100% of the amount paid ;; Final salary (defined benefit) pension in payment | A guaranteed income from an employer's scheme | Widely accepted, often at 100% of the amount paid ;; Lifetime annuity | A guaranteed income bought with a pension pot | Widely accepted ;; Drawdown income | Flexible withdrawals from an invested pension pot | Accepted by some lenders, often only if you already receive it and it can last the mortgage term ;; Undrawn SIPP or pension pot | A pension you have built up but not yet started taking | Counted by a smaller group of lenders, using a percentage of the pot's value]]
Can you use an undrawn SIPP or pension pot as income?
Yes, with some lenders. A small group of lenders will turn the value of a SIPP or other defined contribution pot into a notional yearly income, even if you have not taken a penny from it. Most of them use one of three methods, and the method makes a real difference to how much of your pot counts.
1. A set percentage of the pot's value
The simplest approach treats a fixed percentage of the pot's value as your yearly income. Metro Bank counts 5% of the current fund value for applicants over 55, with a maximum mortgage term of 20 years, and leaves out any property held inside the SIPP. Furness Building Society also counts 5% of the fund value a year for applicants aged 55 or over, even if the SIPP is undrawn. Darlington Building Society counts 4% of the pot's value, assessed against the mortgage term, and Cumberland Building Society counts 4% of a valuation dated within the last 12 months, or the figure your fund manager confirms.
2. The pot divided by the mortgage term
Some building societies take a proportion of the pot and spread it across the mortgage term. Suffolk Building Society takes 80% of the pension fund and divides it by the mortgage term. Family Building Society can consider up to 90% of the value divided by a minimum 10-year term. With this method, a shorter term produces a higher income figure, but it also means higher monthly payments, so the two need to be balanced.
3. A sliding scale based on age
Hodge calculates a percentage of the projected fund value on a sliding scale, based on the age you plan to start drawing it. The scale runs from between 3.3% and 4% for ages 50 to 59 up to 8% for age 77 and over, and Hodge deducts any amount you plan to take as tax-free cash.
Example: Suppose you have a £500,000 SIPP that you have not started drawing. A lender counting 4% of its value would treat it as £20,000 of income a year, and one counting 5% as £25,000. A lender taking 80% of the pot over a 20-year term would count £20,000, rising to around £26,667 over a 15-year term. On a sliding scale for planned drawdown in your 60s, it could be anywhere from £21,000 to £28,000 before any tax-free cash is taken. These figures are illustrative only, and each lender applies its own affordability checks.
Good to know: You do not need to start drawdown just to show a lender an income. Lenders that count undrawn pots use the pot's value instead. Taking money flexibly from a pension can also have consequences: withdrawals above the tax-free part are taxed as income, and gov.uk explains that flexible access can trigger the Money Purchase Annual Allowance, which reduces how much you can pay into a pension each year. Pension decisions are a matter for a regulated financial adviser, and Quanstrom Financial does not advise on pensions.
Does drawdown income count for a mortgage?
It does with some lenders, but not all. Lenders that accept drawdown income usually want to see that you are already receiving it and that the pot is large enough to keep paying it for the whole mortgage term.
Suffolk Building Society uses 100% of the amount you draw, provided it would last the mortgage term at the current rate. Coventry Building Society lists drawdown on a pension fund as an acceptable source of income, and Nottingham Building Society accepts drawdown income, including from SIPPs, for applicants already receiving it. Cumberland Building Society and Hodge assess drawdown pensions using the same value-based methods as undrawn pots, while Metro Bank considers drawdown sources case by case.
Other lenders will not use it. Nationwide lists income drawdown and flexible pension income as unacceptable, and TSB states that drawdown pensions are not acceptable. That is why it is worth checking a lender's approach before you apply, rather than discovering it after a decline.
Which lenders count pension pots and drawdown income?
The table below shows how a selection of lenders treat undrawn pots and drawdown income, taken from their own published criteria.
[[table: Lender | Undrawn SIPP or pension pot | Drawdown income ;; Metro Bank | 5% of current fund value, over 55, maximum term 20 years | Considered case by case ;; Furness BS | 5% of fund value a year, aged 55 or over | Not stated ;; Darlington BS | 4% of pot value, assessed against the mortgage term | Not stated ;; Cumberland BS | 4% of a valuation dated within 12 months, or the fund manager's figure | Assessed the same way ;; Suffolk BS | 80% of the fund divided by the mortgage term | 100% of the amount drawn, if it would last the term ;; Family BS | Up to 90% of the value divided by a minimum 10-year term | Not stated ;; Hodge | Percentage of projected fund value by planned drawdown age, 3.3% to 8% | Assessed the same way ;; Nottingham BS | Not stated | Accepted, including SIPPs, if already being received ;; Coventry BS | Not stated | Accepted as income ;; Nationwide | Fund value alone not accepted as income | Not accepted ;; TSB | Not stated | Not accepted]]
Criteria correct as at 21 October 2026 and subject to change. Lenders can apply further conditions, such as maximum age, loan to value and minimum income, and this is not a complete list of lenders that may consider pension income.
Can you use a pension you are still paying into?
If you are still working, your salary will usually do most of the work, but your pension matters as soon as the mortgage term runs into retirement. The FCA's mortgage rules expect lenders to take a prudent approach to your income after your expected retirement date, so they will want to see what you are likely to live on once you stop working.
Nationwide, for example, can consider pension plans offering flexible drawdown, such as SIPPs, as part of your expected retirement income. It needs proof of your projected retirement income rather than just the fund value, and where that projection excludes tax-free cash it uses 75% of the annual income quoted. If you are over 55, a lender that counts undrawn pots may also let you add your SIPP to your salary now, which could increase what you are able to borrow.
Can you use your pension tax-free lump sum as a deposit?
You may be able to, once you can access your pension. You can usually take up to 25% of a pension as a tax-free lump sum, up to a maximum of £268,275, according to gov.uk. The earliest age you can normally do this is 55, rising to 57 from 6 April 2028.
Once the money is in your bank account, lenders will usually want to see where it came from, so keep your pension provider's paperwork and the bank statement showing the funds arriving. It is worth thinking about the knock-on effects first. Taking a lump sum shrinks the pot, which reduces the income a lender could count from it, and Halifax, for example, will not accept a pension as an interest-only repayment plan once a lump sum has been taken.
The rules around pensions are also changing. Under the Finance Act 2026, most unused pension funds and death benefits will be brought into Inheritance Tax for deaths on or after 6 April 2027. Whether to take money from your pension, and when, is a decision to make with a regulated financial adviser.
Can you use your pension to repay an interest-only mortgage?
Yes, with some lenders, but they usually count only part of it. This is a separate test from affordability: the lender wants to know how you will clear the loan at the end of the term, and a pension can form part or all of that plan.
[[table: Lender | Defined contribution pension or SIPP | Final salary (defined benefit) pension ;; Accord Mortgages | Up to 60% of the tax-free lump sum (15% of the pot), with the term running beyond age 55 | Up to 90% of the tax-free lump sum ;; Nationwide | 15% of the higher of the current or projected fund value | 60% of the higher of the current or projected lump sum ;; Halifax | Up to 15% of a fund worth £400,000 or more, or 60% of the lump sum, capped at £160,965 | 60% of a lump sum of at least £100,000 ;; Coventry BS | 12.5% of the current statement value | 50% of the guaranteed lump sum ;; Darlington BS | 100% of the tax-free lump sum (25% of the projected value at retirement) | Same rule for company pensions ;; Metro Bank | 25% of current value, with SIPPs referred to the lender | 25% of current value ;; Santander | Not accepted | Not accepted]]
Criteria correct as at 21 October 2026. Halifax also requires a minimum income of £50,000 for this and will not accept a pension that is already paying an income, and lenders set their own maximum ages for interest-only lending.
Example: Suppose you have a defined contribution pension worth £400,000. A lender counting 15% of the pot would credit around £60,000 towards your repayment plan, while one counting 12.5% would credit around £50,000. That could cover an interest-only element of that size, with the rest of the mortgage on a repayment basis. This is a simplified illustration only.
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Which situation are you in?
[[accordion: I am over 55, still working and have a large SIPP|Your salary will usually be the main income, but some lenders could add a percentage of your undrawn SIPP on top, without you needing to start drawing from it. That could make a meaningful difference to how much you could borrow, especially on a larger loan. ;; I have retired and live on drawdown income|You will need a lender that accepts drawdown income and is satisfied your pot can keep paying it for the whole term. Some lenders will not accept drawdown at all, so the choice of lender matters more than usual. ;; I am under 55 with a large pension|Lenders that count an undrawn pot, such as Metro Bank and Furness Building Society, often set a minimum age of 55, so your pension is unlikely to count as income yet. If your mortgage runs into retirement, lenders will still look at your projected pension income to check the mortgage stays affordable. ;; I want to use my tax-free cash for a deposit|This can work once you can access your pension, but taking the lump sum reduces your pot and the income a lender could count from it. It is worth weighing both sides before you decide. ;; My interest-only mortgage is ending|A pension lump sum could help repay the capital, and some lenders accept a pension as the repayment plan for a new interest-only mortgage. A retirement interest-only mortgage is another option to look at.]]
For more on the situations above, see our guides to age limits, interest-only and retirement interest-only mortgages, using investment income for a mortgage if you also hold ISAs or a managed portfolio, and mortgages for limited company directors if you pay into a pension through your own company.
What will a lender ask for?
Every lender has its own list, but you can usually expect to be asked for:
- Your latest pension statement, showing the current fund value and provider name, often dated within the last 12 months
- A breakdown of what the pension holds, as some lenders exclude property held inside a SIPP from the value
- Bank statements showing drawdown or pension payments arriving, if you are already taking an income
- A retirement projection, if you are still working and the mortgage runs into retirement
- The usual documents for any application, such as ID, proof of address and evidence of your deposit
How much could you borrow?
For a rough idea, work out the income a lender might count from your pension, for example 4% to 5% of an undrawn pot or the yearly amount you draw, add any salary or other income, and enter the total below.
[[calc:borrowing]]
This is an illustration only. Each lender counts pension income in its own way and applies its own affordability checks, so the figure a lender reaches for you could be higher or lower. Our guide to how much you could borrow explains how lenders treat other types of income.
How Quanstrom Financial can help
Pension income is the kind of case where going straight to your own bank can lead to a quick no, even when you have a large pension and plenty of income. Quanstrom Financial is a whole-of-market mortgage broker based in Eastbourne, East Sussex, and we know which lenders count undrawn pots, which accept drawdown and which accept a pension as an interest-only repayment plan.
Whether you are moving home, remortgaging or buying with a residential mortgage, a mortgage broker at Quanstrom Financial can compare these lenders for you in one place. We speak to clients across the UK by phone or video, as well as locally in Eastbourne and the surrounding area. Quanstrom Financial arranges mortgages and protection rather than pensions, so for decisions about your pension itself we would always recommend a regulated financial adviser. Book a free consultation to talk through your mortgage options.
Frequently asked questions
Can I use my pension to get a mortgage?
Yes, you may be able to. Pension income that is already being paid, such as the State Pension, a final salary pension or an annuity, is widely accepted. Some lenders will also count an undrawn SIPP or pension pot using a percentage of its value, and some accept drawdown income, while others do not.
Do I have to be drawing my pension for a lender to count it?
Not with every lender. Metro Bank and Furness Building Society count 5% of an undrawn SIPP's value for applicants aged 55 or over, Darlington and Cumberland building societies count 4%, and Suffolk Building Society takes 80% of the fund divided by the mortgage term. Other lenders only count pension income that is actually being paid.
Does drawdown income count for a mortgage?
With some lenders. Suffolk Building Society uses 100% of the amount drawn if it would last the mortgage term at the current rate, Nottingham Building Society accepts drawdown income including from SIPPs if you already receive it, and Coventry Building Society lists it as acceptable income. Nationwide and TSB do not accept drawdown income.
How much of my SIPP will a lender count as income?
It depends on the lender's method. Some count 4% to 5% of the pot's value each year, some divide 80% to 90% of the value by the mortgage term, and Hodge uses a sliding scale of 3.3% to 8% based on the age you plan to start drawing. On a £500,000 pot, that typically works out at around £20,000 to £28,000 a year, as an illustration only.
Which mortgage lenders accept pension income?
Most lenders accept pension income that is already being paid to you. For undrawn pots and drawdown income the choice is smaller, and lenders including Metro Bank, Furness, Darlington, Cumberland, Suffolk, Family, Hodge, Nottingham and Coventry each have their own rules, as at October 2026.
Can I use my pension as a deposit for a mortgage?
You may be able to once you can access your pension, normally from age 55, rising to 57 from 6 April 2028. You can usually take up to 25% tax-free, up to £268,275, and lenders will want to see where the money came from. Taking it reduces your pot, and with it the income a lender could count.
Can I use my pension to repay an interest-only mortgage?
With some lenders, yes. Accord Mortgages counts up to 60% of the tax-free lump sum from a defined contribution pension, Nationwide 15% of the higher of the current or projected fund value, and Coventry Building Society 12.5% of the current statement value. Santander does not accept pensions as a repayment plan.
Can I buy a house with my SIPP?
Not to live in. HMRC says residential property held by an investment-regulated pension scheme, a category that typically includes SIPPs, is subject to tax charges, which is why SIPPs are usually used for commercial property instead. You could instead use your pension as income for a mortgage, or take tax-free cash once you can access it.
Will the minimum pension age rising to 57 affect my mortgage?
It could affect your plans. From 6 April 2028 the normal minimum pension age rises from 55 to 57, which changes when most people can take tax-free cash or start drawing income. Lenders set their own age rules for counting pension pots, and these may change over time.
Does taking my tax-free cash affect how much I can borrow?
It can. Taking a lump sum reduces your pension pot, so lenders that count a percentage of the pot's value will count less of it. Some lenders, including Halifax, also will not accept a pension as an interest-only repayment plan once a lump sum has been taken.
Written by Toby Quanstrom CeMAP, Director at Quanstrom Financial, a whole-of-market mortgage broker based in Eastbourne, East Sussex.
Lender criteria in this guide were correct as at 21 October 2026 and are subject to change. This article is general information only and does not constitute personal advice, pension advice, tax advice or a recommendation of any lender. Quanstrom Financial does not advise on pensions. Your circumstances will determine what is available to you.
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