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What is an
endowment mortgage?
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An
interest only mortgage backed by an endowment policy.
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Mortgage interest payments
are paid to the lender.
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Endowment premiums are paid
to the provider.
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Interest rate changes on the
mortgage do not affect premiums due on the endowment policy
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How
do endowment mortgages work?
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An endowment mortgage
is often a combined insurance and investment contract. Premiums
are used to:
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Pay for life cover - The
sum assured will usually match the mortgage amount. ie insurance
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Build up a targeted lump sum to repay
the mortgage at the end of the term. ie an investment
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Is repayment
guaranteed? |
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On death?
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Provided the sum assured has been set to match the mortgage
amount, the policy will repay the mortgage on death. The benefits
are paid under an insurance contract and are certain.
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maturity? |
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There is no guarantee that
the target sum will be met. This is the investment part of
the contract - the final lump sum depends on bonuses, performance
of the underlying funds and on premiums having been correctly
set.
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