Borrow on the surrender value of your life policy
In detail
What is a policy loan?
When you take out a policy loan the amount you borrow is secured against the surrender value of your life assurance policy.
If you have been paying premiums on your Scottish Widows life assurance policy for a while, it should now have a surrender value. This is the amount it is currently worth.
You don’t lose the policy. Continue to pay the premiums in the usual way and when the loan is repaid all rights will go back to you. Your policy will still mature at the expected time and you will receive all the money due to you along with any bonus earnings.
To find out the surrender value of your policy please contact us.
How much can I borrow?
You can usually borrow from £1,000, up to 80% of the surrender value of your life policy.
But a Scottish Widows Bank Policy Loan also gives you the flexibility to borrow extra money from time to time. So you can borrow what you need right now, then £100 or more – as and when you choose - until you reach your agreed limit.
To find out the surrender value of your policy please contact us.
How much does it cost?
The Scottish Widows Bank Policy Loan is both flexible and cost effective. So the interest rate you will pay is just 3% over our Base Rate.
Because it is linked to the Base Rate it may go up or down, depending on market conditions. But it will always remain competitive.
And there are no additional set up costs, arrangement fees or early redemption penalties.
How is it repaid?
You can repay your loan over any length of time – up to the maturity date of your life policy. But unless you have a specific reason for leaving repayment until then, it’s better to do it over a reasonable period - such as three or four years if the loan is to buy a car, or over the course of a year if it’s for a holiday.
You also have a choice of repayment methods - you can:
- Repay the capital on the loan plus interest by regular monthly Direct Debit or lump sums.
- Repay interest only on the loan by regular monthly Direct Debits.
- Add interest to the loan without making any monthly payments and repay it all when the policy matures. (Available if borrowing up to 70% of surrender value).
