Types of Mortgages

Repayment Mortgages | Endowment Mortgages | Pension Mortgages

Endowment Mortgages

An Endowment Mortgage is the simplest type of mortgage, sometimes referred to as an interest-only mortgage.

With this, and Pension Mortgages, the capital is not repaid until the end of the mortgage period. The monthly repayments are the interest element only.

In addition to the interest, you also take out a life assurance policy, an endowment. This payment is split in part between a life insurance policy and an amount invested into investment funds. Over the years these funds attract capital growth, and by the end of the mortgage period need to equal the amount borrowed, as it is this that repays the capital borrowed.

Depending upon your instruction, the skill of the investment managers and the performance of the fund, the final lump sum could be more or less than the loan. If it appears the lump sum will not cover the loan you will be required to increase the level of your endowment payments. Equal you will receive any surplus left from the policy after paying off your mortgage.

Repayment Mortgages | Endowment Mortgages | Pension Mortgages