Pension-linked mortgages are a form of interest only mortgage. You make payments into a pension fund and also into a life assurance scheme. The life assurance policy will ensure that your mortgage is paid if you die before the end of the loan term. The pension plan will provide you with a lump sum payment and pension when you retire. The cash lump sum will be used to repay the outstanding balance of your mortgage.
The payments you make into these types of repayment vehicles are then invested in stocks and shares. Remember that, this type of investment carries no guarantees that there will be enough money in your pension fund to meet your debts when you retire.
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