How does an endowment mortgage work?
An endowment mortgage consists of an interest only mortgage and an investment vehicle designed to repay the mortgage known as an endowment policy. The policy invests in a variety of stocks and shares with the expectation that at a certain point in time the growth of the investment will be sufficient to repay the mortgage in its entirety. The policy also provides life insurance cover and should you die prior to end of the policy term the provider will repay the mortgage in its entirety regardless of the value of the investment fund. Whilst these mortgages were common in the past recent poor performance of the investment policies have made them less attractive to consumers. If you wish to have an investment mortgage we would recommend that you take Independent Financial Advice regarding any investment you wish to make in order to repay the mortgage.
