Endowment Mortgage

Endowment Mortgage

Unlike the normal repayment mortgage where you pay off the loan plus interest over so many years an Endowment Mortgage is where you pay only the interest off monthly and none of the capital until the end of the term from your endowment policy.

The endowment is an investment plan which you pay into monthly and it is invested in bonds or shares in the hope that this will eventually pay off the original loan at the end of the term.

The worry, in this very unstable market, is that if the bonds or shares are not doing well then you could end up with not enough to repay off the mortgage loan.

It is therefore necessary to keep an eye on your investment plan to make sure that you do not lose out and you should receive a regular reprojection letter from your lender telling you how your investments are doing.

If you find that there is going to be a shortfall then you need to think about making changes to your mortgage and this can be done by changing to a repayment one or extending the term or pay more in each month but you will need to take expert advice on which is the best option for you.

If you leave the mortgage run to the end of the term when your investments pay up and you find there is a shortfall you must discuss with the Lender how you can pay this, if you have no other savings, then you could extend the term or discuss another option.

It is most important before you stop your payments to seek proper financial advice as you could lose out.