Many of you opt to take a lump sum commutation from your pension entitlement and this is often used to purchase a holiday home, which acts as an investment as well as a reward for many years of hard work! This kind of purchase often takes time to complete so it may prove beneficial to start the process early rather than wait for receipt of your lump sum. We have recognised this need and developed the Commutation Loan to help you achieve your goal.
How it works:
You will need to provide details of your pension benefits on retirement to establish your commutation amount. An up to date copy of your pension forecast will need to be submitted with your application.
You can apply to borrow up to £100,000 or a maximum of 80% of the value of your commutation, whichever is lower and you can draw it up to a maximum of 3 years before your agreed retirement date.
Like our other loans, the Commutation Loan is flexible and can be drawn in stages, allowing you the freedom to finance something as committed as a new holiday home. You will sign a new loan agreement for each stage payment taken and you will only pay interest on the funds drawn, not the total amount agreed.
You will make monthly repayments to the loan based on the interest only (plus a nominal amount to ensure that the final payment does not exceed the agreed amount borrowed) with a final payment of the outstanding balance on receipt of your pension commutation.
Top up loans may be available in certain cirumstances and as with any other No1 CopperPot loan, you will not be penalised for lump sum payments or an early repayment of your loan. If you were to pay off a lump sum, for example, your monthly repayments would stay the same but you would essentially start paying back your capital earlier and the total amount of interest would be less.
Life Cover is also included at no extra cost, this covers you up to age 65 and up to £40,000 so if the worst were to happen, the first £40,000 of your loan would be covered and any savings doubled, so as to ease the strain on your loved ones.
So if you’ve been dreaming of buying that Spanish villa or you have any other big projects that need financing, give us a call, we just may be able to help…
CUNA Mutual offer Income Protection that will protect your income from accident, sickness or loss of job. Click here for more details:
At a glance:
- Unlock your pension commutation up to 3 years before you retire.
- Loans up to £100,000 or 80% of your commutation amount.
- No penalties for early repayments or lump-sum deposits.
- You can take your agreed loan in stages.
- All loans include life cover up to age 65 at no cost to the member, so in the event of death the first £40,000 of your loan will be cleared (Terms and Conditions apply).