Endowment Policy

[Kathyan]

Does anyone know if it's possible to get a loan (not mortgage) with an endowment policy as security?

[ummmm]

Can I ask why?

There are millions of people that were told that not only will their policy cover their loan but they would also be left with a cash sum. These millions now face the fact that their policies haven't even covered their loans.

Endowments have proved risky.

[EDDIE51]

It is possible but risky.

[EDDIE51]

I should have asked is this an endowment mortgage or a saving / insurance policy ?
You can get a loan against an endowment savings policy but the interest will possibly be more than the endowment is worth.

[Kathyan]

It's to pay for our daughter's wedding. When we realised that the policy wouldn't cover the mortgage, we changed to a repayment one. We have kept up the policy payments and will have a decent sum when it matures. The problem is it has just over two years to go and our daughter is getting married next year!

[ummmm]

Would it not be easier to get a loan if you can afford it? Then use the endowment to pay it off.

[EDDIE51]

In that case I would think you can get a loan against it , go to your bank and ask advice as to the best / cheapest option.

[ummmm]

*if you can afford the repayments for a year.

[Kathyan]

It would probably be better to get a loan and then pay it off when the policy matures. I just wondered if getting a loan against the policy was possible. Thanks all!

[Peter Pedant]

since it is a financial instrument with value
you certainly should be able to.

The obvious people to ask are the people who give loans.

even if they give tinkly laughs and say: 'oh we dont do THAT sort of thing hahah titter titter'
[ as a bank did when I asked for a buy-to-let loan ]

I am not sure if it wold be that cheap - altho better than an unsecured loan.

You are of course quite RIGHT not to go for the other options - known as the Ugly sisters or Ugly Twins - stop paying (making it paid up) and selling it back to the endowment company (rip off yet again yawn) or selling it on the open market

and good luck

I did the same as you and hung onto the policy as a savings vehicle -nice to have the pot of well silver at the end, but if you do the sums, the last ten years has been pretty crap

[Peter Pedant]

oh go for a possible loan against the policy as the rate given should be cheaper as the risk is less

[jake-the-peg]

You can of course cash these in early with companies that will buy them - especially in situations like yours (and mine) when they're nearly mature

When I looked at this though they weren't doing you any favours and you were pretty much getting the minimum value while they pocketed the final bonus

[factor-fiction]

I think there are tax implications too from cashing in early.
I agree it would not make financial sense to cash in with only 2 years to run