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Can An ISA Investment Be Used As A Guarantee For A Siblings Loan

by Jim ONeil on February 7, 2011

in uk loans news

An Investment ISA is considered a shares and stocks ISA. An individual can invest money in various funds that feature different investment objectives. All returns on investment are UK capital gains and income tax-free. This is a tax-efficient method of investing, whether the individual is interested in capital growth or regular income.

A maximum of £5,100 can be invested in a Cash ISA from one provider. Up to an additional £5,100 can be invested in a Stocks and Shares ISA. Alternatively, a maximum of £10,200 can be invested in a Stocks and Shares ISA. Individuals can hold their Investment ISA as long as they wish but it is generally regarded as a medium or long-term investment.

Though this investment is worthwhile for the investor, it is not as useful for someone else. If a sibling applies for a secured  loan, collateral will be required. Using your own ISA investment to guarantee the

loan of a sibling is not an option. This is because if the loan should default , the lender cannot call on the ISA investment to repay the outstanding balance.

An alternative approach is to become the lender yourself. If enough money is held in the Investment ISA, the income generated may be equivalent to the loan your sibling needs. Use the income received to fund a loan to the sibling. As the sibling makes loan payments, the money can be reinvested in the Investment ISA.

This arrangement will not be feasible if the sibling needs a large loan. In this case, you could serve as a co-signer on the loan, but you must be able repay the outstanding balance should your sibling default. For those who are confident that their sibling will repay the loan, this is a great way to help the family member secure needed financing.

Rachel Duty

I don’t know that which you mean by “rate of interest as often a Unit Trust investment is directly committed to stocks, ie the stockmarket so performance could be determined by that. The annual mangement charge (AMC) of just one percent is standard however, remember that along with the AMC that L&G charge, there may be a fund management charge. L&G are among the UK’s leading insurance companies so you ought to be resassured with this. A great deal is dependent about the fund you’re committed to your agent must have talked about your attitude to investment risk before you decide to made an investment make it possible for him to choose the right fund/s for the plan. Within the long run, equity opportunities will outshine building society deposits bear in mind, you will find no guarantees using this type of investment. Incidentally, Unit Trusts are the same to ISA opportunities – there’s simply no difference within the investment itself. The only real difference is the fact that an ISA is positioned inside a tax-free “wrapper”. You will find limits for your annual ISA allowance that you cannot exceed. For those who have any queries, then speak to your agent or Legal & General.

Princess Paradox

I was once offered a £1000 loan at £100 per month for 48 months. I just laughed. =P

I have a letter somewhere, I'll let you know who they are.

Beneficial Finance, Barnsley, S.yorkshire

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