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Is it possible to use an Endowment Policy as security for a loan

by snookered 12 September 2010 |

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I've tried to get a loan in order to consolidate my debts of £15000 but have been turned down due to affordability.
Because my name is on a joint mortgage I have to put that down in outgoings despite not having to contribute to it, so I can afford what I am asking for, but my bank can't see past that. My credit score is 999 and excellent (why I bothered paying for it I don't know)
In two years I have an endowment policy maturing (not related to current mortgage), I don't want to surrender it early and it is worth at least 4 times what I am asking for.
Do any company's offer loans secured against this sort of collateral and if they do are there any pitfalls to watch out for?

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878

MikeGG1 posted
Check the terms of the endowment policy because many of them can be borrowed against.
Mike
Posted on 12 September 2010 | Love 0 loves Report
174

JoeEasedale posted
Affordability cannot be shrgged off as easily as you suggest. It is a real issue.
If your name is on a mortgage then you could be called upon to pay it ALL at any time, so dont say you don't have to contribute to it. That can change in the blink of an eye.
Security is no replacement for affordability unless you see a pawnbroker.
It sounds like you need a full appraisal of your financial situation and options to me.
Posted on 12 September 2010 | Love 0 loves Report
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snookered posted
I've spent the last year and a half working hard to get my debts down as much as possible and have 2 credit cards outstanding, one at just under £9000 and one at £2500. For a long time I was vey ill and used the cards to help out when off and out of work. It came to a head last year when out of the blue I realised that I was relying solely on my wife to provide for me and I was contributing next to nothing to our household outgoings.
I have since cut my spending down to the bare essentials, paid off 1 card and 1 loan and have no useful credit cards at all (all cut up), no longer have an overdraft and work as much overtime as my job allows. Sold 2 very nice items that were meant to get me to try and get into a hobby and get me out of the forever sinking feeling of depression, but the money was more important and I can buy them again when times are better.
I seriously considered a DMP, got in touch got in CCCS, drew up a plan, however my wife was furious and things fell apart completely last Christmas and I moved out for a month and a half, I didn't just run away I was being abused and had been for some time and this finally cracked me. During that time I contacted my bank numerous times for help (none offered), CAB for further advice and ended up in A&E over New Year.
I appreciate what has been said about affordability with regard to the joint mortgage and no that the debt is my problem and I'm only wanting to control it better so that it doesn't cost me so much in interest. If I could fast forward two years I would have no problem as the Endowment will clear the debt immediately and I have absolutely no intention of getting in this mess again, but ultimately I want to be able to put some of my income towards our family outgoings and currently can't. A loan now would enable that. I can't do any more and I just felt that if it was given with the security of the Endowment I would at least feel that I am contributing and would feel an awful lot better for it
Posted on 12 September 2010 | Love 0 loves Report
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petematthew posted
I'd be interested to know what the surrender value of the endowment is compared to the likely maturity value. Is there a penalty for surrendering early? Even if so, do the maths and see if this penalty is more or less than the interest you are going to pay over the next two years, plus the remaining endowment premiums.
If it is a With Profits policy, this exit penalty will be called a Market Value Reduction or Market Value Adjustment. If the penalty is significant, then it may well be worth hanging on to. Check your last statement for this information, but call the endowment company to double-check. IT could be that you could sell your endowment to a third-party and get more than the surrender value, but this late in the plan, I doubt it.
Do check back and let us know the outcome.
Pete
MeaningfulMoney.tv
Posted on 16 September 2010 | Love 0 loves Report
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britinyspy posted
Sure It is possible to use an Endowment Policy as security for a loan with special services of http://www.longtermloans4u.co.uk. It provides loans and financial services which you can not find anywhere else in U.K. long term loans , long term loans with lender,long term loans with out broker are its main services
Posted on 15 October 2012 | Love 0 loves Report

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