Low cost endowment mortgage

An endowment policy is a long-term savings plan invested in the stock market. Some advisors these days recommend them as a good way of repaying your mortgage.

The Advantages of a low cost endowment mortgage

1. A low cost endowment policy will automatically give you life cover, which would pay off your mortgage if you were to die during the term.

The Disadvantages of a low cost endowment mortgage

1. Few people know that during the first few years of paying into the policy much of your money does not go towards repaying your mortgage, but to the advisor who sold you the product. This is because of high upfront charges.

2. As your money is invested in a stock market, there is no guarantee that your investment will grow fast enough in order to pay off your mortgage at the end of the term.

3. Low cost endowment policies are considered very inflexible, as they do not allow you scope if you cannot afford a one off payment. This is because of a low cash-in value system put in place if you stop paying your premiums during the beginning stages. This means that you get back less than what you paid in premiums, or even nothing back at all!