What does Endowment Mortgage mean?

Endowment Mortgage supposes that you have an arrangement with your lender that he will be the primary beneficiary of your endowment life insurance, while you will be paying to the lender only the interest on the mortgage. By not making payments actually towards the principal of the mortgage, instead you will be paying the premiums towards your life insurance, and when this reaches maturity it should be sufficient so as to pay your principal to the lender, and usually there might be even a leftover amount which you will receive. The endowment policy, certainly depending on your age is usually required to have a term of 25 years.

The main convenience in this type of arrangement is that an endowment policy becomes both your savings account and offers you some protection. Plus, in case you change home, this endowment policy is transferable in the sense it can become assurance basis for your next mortgage.

However, you have to be very careful when entering such an arrangement as it is not all the way made up of positive aspects. Pay special attention to the terms and conditions of the policy, and make your own calculation whether indeed by buying this insurance, it will eventually generate enough capital as to pay for your whole mortgage (meaning whether it will offer you coverage if you only pay for the required premiums).