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 Guide to Mortgages

Endowment Mortgages

An Endowment Mortgage is the simplest type of mortgage. It consists of a monthly payment made up of:

  • Interest on the loan and
  • A monthly contribution to an endowment (life assurance) policy.

The loan itself is paid off in one lump sum with the proceeds of the life assurance policy. During periods of low interest rates, there may even be a surplus left from the policy after paying off your mortgage.

When Should I Choose an Endowment Mortgage?

  • When the Interest (Base) Rate is low (i.e. less then 12%). Especially for high earners, as tax relief is maximised.
  • When you expect your earnings to increase in the future.
  • Not during a recession - you will probably have to increase your monthly premium to meet your payback period.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

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