Selling your endowment to clear debt could protect your home

Publication date | 11/02/2010

Releasing equity in a home may be an option some people in debt consider in order to clear what they owe, although one financial expert has advised that this option should be given careful consideration.

Writing in the Telegraph, Kevin Boon, of the Consumer Credit Counselling Service, said equity release can only be considered by those who own their own home and who are over the age of 55.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers who did not want to release equity, or who were not able to do so, had decided to sell an endowment policy in order to raise the money required to clear debt.

Older Britons struggle with credit card bills

Mr Boon's advice came after a man wrote to the newspaper asking what he and his wife should do about their credit card debts.

The couple had used most of their savings to clear their mortgage and in order to cover other costs they had turned to credit cards.

However, they are now struggling to meet their credit card repayments and asked how they could raise money to clear what they owe without having to sell their home.

"Equity release allows you to release money - the equity - in your property and continue to live there," Mr Boon said.

"Releasing the equity from your home is a big decision to make. It should only be considered once all other options have been explored and after a financial assessment."

Another option could be to sell your endowment policy, which will also mean you can stay in your own home but raise the money needed to clear debt such as credit cards.

Endowment cash could let you stay in your home

Mr Radford, from aap, said some of its customers had decided to sell their unwanted endowment policies in order to be able to clear their debt and stay in their home.

He added that should aap make an offer to purchase an endowment policy, it will always pay more than the surrender value offered by the insurance company.

Reasons to sell your endowment policy