Cash in Endowment to pay debts

stardestroyer_2

Hiya

New poster here so please go easy!

Where do I start!

The wife & I have recently been through her being made redundant from her job as a graphic designer, couple that with 3 kids, one being preschool & my job being commission based (largely) & motor trade related, things aren't rosy in the garden anymore!

We've done the number crunching & followed martins (brilliant) advice - cancelling the digital tv, going to budget supermarkets etc & we are at a position where we owe around 25k in unsecured debts, equalling £557 per month, alongside a £156,000 mortgage costing £547 per month alongside the usual living expenses, it's skin of the teeth time & verging on debt management/iva territory.

We have the house on the market for offers over £210,000 & we aim to go into rented, pay off the debts & start again, rightly or wrongly this is what I think we should do.

My question is this. When we first took our mortgage on our first property back in 1997, this was on an interest only basis & we set up an endowment policy through Norwich Union (Aviva) at £83 per month in May 1997.

We have remortgaged over the years & as such the £48300 part of the mortgage has stayed 'interest only'. Can I cash this policy in to pay off some debts? I could really do with the bills coming down & I can deal with the shortfall later.

Thanks for reading & appreciate the advice!

Peelerfart

Possibly,ignoring for now, the rights and wrongs of this,the first step may be to find out how much the endowment is worth.

stardestroyer_2

cheers, will ring them tommorow, should be worth around £12k (minus fees - I think!)

dunstonh

Also find out what mortgage promise value you have (if any). That can often be key to whether an Aviva one is worth keeping or not (you lose it if you sell/surrender). Also, is it unit linked or with profits?

And, what would be the cost of replacement life cover and the cost to convert the £48.3k to repayment basis?

stardestroyer_2

Ok

It's worth £12756.67 (not guaranteed) for surrender. I guess I could sell it for slightly more.

Looking through the paperwork it is a 'with profits' fund through Aviva.

The only problem I can foresee is the mortgage lender (Nationwide) will not let me swap my mortgage product to repayment for the whole amount due to our income multiples being out of kilter with the mortgage (£156,000)

Currently our combined income is £24000 + my commission which is around about another £5-6000 per year.

What I want to do is use the cash to pay off around about half of my unsecured debts...

Thanks!!