The 50% Net Asset Value Rule
Under HMRC's rules for registered pension schemes, a SIPP can borrow no more than 50% of its net asset value (NAV) at the point the borrowing is taken out. NAV is calculated as the total market value of all assets held in the SIPP, minus any existing liabilities (including any existing borrowings).
This 50% cap applies across the whole SIPP — not just to the property transaction in question. If the SIPP already has an outstanding mortgage on a property, that liability reduces the NAV and therefore reduces the additional borrowing available for a further transaction.
The rule is assessed at the time the mortgage is drawn down, not at the time of application or approval. A SIPP that grows in value between mortgage offer and completion benefits from the higher valuation — and a SIPP that falls in value between offer and completion could technically breach the limit, though lenders will typically have conditioned their offer on the fund value at the drawdown date.
Worked Examples
To make this concrete, here are three common scenarios:
- Scenario 1 — Pure cash SIPP: SIPP holds £400,000 in cash. Maximum borrowing = £200,000. Maximum property purchase = £600,000 (before costs).
- Scenario 2 — Mixed asset SIPP: SIPP holds £250,000 in cash and £150,000 in investments = £400,000 NAV. Maximum borrowing = £200,000. If the SIPP contributes the cash and investments, total purchasing power is still £600,000 — but not all of the assets may be immediately liquidatable. Planning the liquidity position is important.
- Scenario 3 — Multiple members (pooled SIPP): Two pension members pool their SIPPs. Member A: £300,000. Member B: £200,000. Combined NAV = £500,000. Combined maximum borrowing = £250,000. Total purchasing power = £750,000.
Use our SIPP LTV Calculator to model your own position, or our SIPP Mortgage Calculator to understand what a specific loan amount would cost in monthly repayments.
How to Increase Your SIPP's Borrowing Capacity
If the 50% cap is constraining what you can acquire, there are legitimate ways to increase your SIPP's purchasing power before or alongside the mortgage transaction:
- Make additional pension contributions — contributions top up the fund value and therefore increase the available 50% cap. Annual allowance limits (£60,000 in 2025/26) and carry-forward rules apply
- Consolidate other pension funds — transfer old workplace pensions and personal pensions into the SIPP. Even a relatively modest transfer can meaningfully increase purchasing power
- Pool with other SIPP members — where multiple individuals (e.g., business partners or family members) each have pension funds, they can jointly acquire a property through their respective SIPPs
- Time contributions strategically — contributions need to reach the SIPP and be invested before the NAV calculation date, so plan ahead
Lender LTV Constraints vs HMRC Rules
It is important to understand that the HMRC 50% rule sets the maximum borrowing — individual lenders will apply their own LTV limits which may be lower. Most SIPP mortgage lenders operate at 60–75% LTV on the property value, with 65–70% most common for mainstream commercial property.
This means the effective constraint on borrowing is usually the lower of the HMRC 50% NAV cap and the lender's LTV limit. In practice, for larger SIPPs, the lender's LTV constraint is often the binding one.
For more on lender-specific criteria, see our articles on SIPP mortgage interest rates and how to improve your chances of approval.