Wallace & Co. Solicitors and Notaries.

Q8: What is an endowment mortgage?
A8: Here you may still borrow £100,000 over 20 years. However, the amount you pay each month is for interest on the loan only. You pay nothing off the capital. Even after 20 years you still owe £100,000. However, when you take out the loan you must also take out an endowment life policy and pay the premiums. After 20 years the insurance company pays out a lump sum which is sometimes enough to pay off the mortgage (but not always).

Even with a repayment mortgage lenders like you to take out some basic life assurance called "Mortgage Protection Insurance" or "term assurance". This is a cheap form of insurance which provides enough to repay the loan if you die. If you survive the mortgage term you do not get a lump sum.

Wallace & Co., Solicitors and Notaries. 11a Station Parade, Balham High Road, London, SW12 9AZ (entrance in Ravenstone Street).
Tel: 020 8675 6755. Fax: 020 8675 2001.
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