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Endowment Mortgage

An Endowment Policy is a separate investment vehicle which can be used to repay a mortgage. Endowment-linked mortgages are the main alternative to a Capital & Interest mortgages, although their popularity has dwindled massively in recent years.

Lenders will advance you money and set the mortgage up on an Interest Only basis. The borrower would then invest a separate monthly amount into an endowment life insurance policy for an agreed length of time. When the policy matures, the lender takes repayment of the money owed to them and should any surplus monies be generated, these are kept by the borrower.

The downside of using an Endowment Policy to repay your mortgage is that it does not guarantee to do so. The money that is paid in by the investor is invested on the stock market and as with all investments, returns cannot be guaranteed.