Endowment

How does it work?

You make two payments per month. One to the lender to repay the interest on the amount borrowed, the other to an insurance company for an endowment contract. There are mainly two types of endowment: unit linked or with profits. Both invest in a broad range of assets including stocks and shares. The capital in the endowment builds up over the term of the mortgage to repay the outstanding capital, although to achieve this the investment performance needs to be sufficient to build up the required capital and this performance cannot be guaranteed.

ADVANTAGES:

1. This one's very flexible.
2. You can take the endowment policy with you if you move home or change mortgage lender.
3. Endowments usually include some kind of life cover and some also include critical illness cover.
4. This can be a cheaper method of buying such cover under usual conditions.
5. If the endowment contract performs well, you may accumulate more funds than required to repay the loan.

DISADVANTAGES:

1. Endowments are not totally risk free as there is some investment in the stock market, but the spread of investments is wider which should, in theory, reduce the risk.
2. There is a possibility your fund may not have built up sufficiently to repay the capital.
3. You must keep a watchful eye on your fund's performance to help prevent this happening.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

For mortgage advice you can choose how we are paid:

For example, you can pay by a fixed fee of £800.00 and we will refund any commission we receive from the lender, or you can pay an advice fee of £149.00 and we will receive commission from the lender for placing the mortgage. We will discuss payment options with you and advise the actual amount payable before we begin to provide our services.