Using your savings to repay your loan

At London Mutual Credit Union, your savings play an important role in securing your financial well-being and supporting your loan agreements. While savings are typically held against outstanding loan balances for security, there are situations where you might be able to use your savings to repay a loan. This guide explains when and how this is possible, and the conditions that apply.

How Savings Secure Loans

When you take out a loan with us, part or all of your savings are secured against your outstanding loan balance. This means you generally cannot withdraw your savings until your loan is fully repaid. This protects both you and the credit union, ensuring responsible lending and borrowing practices.

Exceptions: Using Savings to Clear a Loan

In some cases, London Mutual Credit Union may allow members to use savings to clear an outstanding loan and reduce monthly payments. However, this is not our standard policy. Each request is considered individually based on member circumstances and is subject to management approval as a goodwill gesture.

Requesting to Use Savings for Loan Repayment

Contact our Member Services team to discuss your situation by calling 0203 773 1751 (option 4)
Explain your reasons for requesting savings to repay your loan.
Your request will be reviewed by management, considering your circumstances and account history.
If approved, savings may be used to repay the loan and adjust your monthly payments.

Key Points to Remember

Remaining savings withdrawal is only possible after all loans are cleared, except in approved cases.
There are no early repayment fees or penalties.

What Happens to My Salary Deduction or Direct Debit?

The method you used to repay your loan (such as salary deduction, direct debit or standing order) will continue until you tell us otherwise.

Once your loan is fully repaid, the money deducted will be deposited into your Membership Account, helping you build savings. You can access these savings 24/7 using Online Banking with us.

If you would prefer to cancel or reduce your monthly deduction, please let us know.

What Happens to My Remaining Savings?

When you take a loan with us, your savings are locked and held against the loan until you have repaid the loan in full. If you still have savings left over after repaying, we will unlock them for you when the loan is cleared. If you request loan clearance via email, we will respond to you when it is done.

You will be able to access and, if you wish, withdraw the funds using Online Banking.

Conclusion

London Mutual Credit Union places your financial security first. While savings are generally held against loans, exceptional use of savings to repay loans is possible in circumstances when savings are higher than the loan. If you need support or wish to discuss your options, our team is here to help every step of the way.

You can use your savings to repay your loan early if you like. As long as you have enough in your savings to cover the whole of the amount left to repay, you can clear the loan immediately.