Marginal Revolutions

A endowment mortgage is a loan that is an interest only basis. The capital is to be repaid by one or more endowment policies. This phrase is used in the United Kingdom. Lenders and consumers typically use this term and it is not a legal term. Typically in this process the borrower agrees to two separate agreements. One of these agreements is with the insurer for the Endowment policy and the other is to the lender for the mortgage. The arrangements are very distinct and the borrower has the power to change the arrangement if he or she wishes. This practice is not as common now as what it used to be.

There are several reasons that people decide on a Endowment mortgage. Some of these reasons include, saving money, it is often cheaper than a regular repayment loan. Another reason is that many lenders charge interest in a yearly manner. The interest rate winds up being much lower with this type of mortgage loan.

There are several problems with the endowment mortgages. At the end of the 1980s endowment mortgages were at their peak. Many of these mortgages were discovered to be mis sold. In the 1990s with the increasing regulations of investment and the potential for regulatory actions against the insures led to a decline by 7.5 percent. By the year 2001 using endowments to repay a mortgage was basically seen as taboo. If you are interested in learning the history behind Endowment mortgages, you can do a search online. In some parts of the world these mortgages are still present. Always make sure that you do extensive research before you purchase a mortgage anywhere even if it is an Endowment mortgage. You will be safer if you do your own research. It would not hurt to print out a copy of your research to take with you if you choose one of these loans.