Endowment Mortgage

An interest only mortgage where the capital is expected to be repaid by the proceeds of an insurance policy on maturity. Complicated financial products which combine life insurance and investment growth in one package. Essentially, you do not repay any of the capital you borrow during the term of the loan, but the endowment policy should grow to produce a lump sum large enough to repay the balance in full at the end of the pre-agreed period, normally 25 years.

Your monthly payments are made up of interest on your mortgage loan and the premium for the endowment. Within the package you also pay for life insurance which will repay the loan if you die but there is no guarantee your endowment will pay off your mortgage.

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