Ultra high charges for loan against endowment

numanor

I HAVE HAD A LETTER FROM A WELL KNOWN FINANCIAL INSTITUTION ABOUT A LOAN I HAD TAKEN OUT AGAINST MY ENDOWMENT POLICY FOR £5K AND I AM BEING CHARGED £10K IN INTEREST CHARGES, I HAVE NOT BEEN PAYING THE INTEREST ON THE LOAN AS I WAS TOLD BY AN IFA AT THE TIME THAT IT WOULD BE DEDUCTED WHEN THE ENDOWMENT POLICY MATURED. BUT I HAD NO IDEA THAT IT WOULD BE AS HIGH AS £10K!!
THE ENDOWMENT WILL MATURE IN 3 YEARS TIME AND AS THERE IS A SEVERE SHORTFALL WITH THIS POLICY IT WILL CAUSE ME A SERIOUS PROBLEM ON TOP OF WHICH I HAVE TO DEAL WITH THIS £15K BILL AS WELL. HOW CAN THEY GET AWAY WITH THIS EXTORTIONATE RATE OF INTEREST? CAN ANYONE PLEASE ADVISE?:mad:

opinions4u

If there is a surplus on the policy, please invest in a new keyboard where the option of a working <CAPS LOCK> key is available.

Please will you post what the interest rate charged actually is and how long the loan was for?

£10,000 over a very long time on a £5,000 debt could actually be a rather low rate. But if you haven't been making interest payments, they will roll up year in year, so your debt is always increasing.

(I notice from your previous posts that you've asked the same question twice before. Looks like you borrowed the money in 1996. So £5k growing to £15k over 17 years would be an annualised interest rate of around 6.75%. That strikes me as a fairly good deal).

dunstonh

OW CAN THEY GET AWAY WITH THIS EXTORTIONATE RATE OF INTEREST?

Doesnt look like they are. The rate seems consistent with a last resort option that has compounded interest.

THE ENDOWMENT WILL MATURE IN 3 YEARS TIME AND AS THERE IS A SEVERE SHORTFALL WITH THIS POLICY IT WILL CAUSE ME A SERIOUS PROBLEM ON TOP OF WHICH I HAVE TO DEAL WITH THIS £15K BILL AS WELL.

There is a saying that you should never put off until tomorrow what you can do today. If your maturity is in just 3 years time then you have been putting it off and this is the consequence of that.

Most lenders will allow you to defer the repayment of the mortgage back for a few years to allow you to cover the shortfall. As long as you havent been in arrears this would be the way to do it.