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What is an endowment mortgage? This is a very clever and innovative approach to mortgages that enabled many people to own houses in the 60s and 70s. However in recent times, due to various reasons, endowment mortgages have not quite worked and people who take out such mortgages have not been able to pay off what is owed.
An endowment mortgage is where the principle of the loan is covered by an endowment insurance policy. Thus the mortgage is paid off by paying insurance premiums on an insurance policy, which are usually much lower than a mortgage payment would be. The endowment policy ensures the mortgage holder will be able to pay off the loan when it becomes due. Thus the only thing that remains due is the interest on the loan.
However in recent times these endowments arrangements have run into various problems.
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