UK Endowment mortgages are effectively an interest only mortgage with an additional savings plan in the form of an endowment policy. An endowment mortgage policy is one way of saving for the future capital repayment of an interest-only mortgage.
This is a type of life insurance policy combined with a saving plan, aimed at giving you sufficient funds by the end of the set mortgage term. Some advantages of Endowment Mortgage are:
- An endowment mortgage gives the borrower a chance of receiving a cash sum over and above the sum necessary to repay their mortgage at the end of the term.
- The repayment date for an endowment mortgage is fixed no matter how many times you move house again in the future. If you do move again, you simply carry on paying the endowment premiums and take out a new mortgage for the sum required to purchase your next home. Any additional mortgage money required could be borrowed on either a repayment basis or an endowment basis and repaid over whatever term is convenient.
- An endowment policy includes a life assurance policy as well as a savings plan.
You should also check carefully to see whether the plan offers a guarantee of its future value, which is sufficient to repay the mortgage. |
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