Endowment Mortgages were set up in the 1980’s and 1990’s. They were an alternative to the straight forward repayment mortgage, where each monthly payment paid off part of the capital that you borrowed as well as the interest on that capital.

Like an Interest Only Mortgage an Endowment Mortgage was a way of paying off the interest only each month. Endowment policies were set up as monthly investment vehicles. Endowment Policies meant that you could invest a certain amount of money in what was then a booming stock market. People hoped that their investments would generate excellent returns and the fact that life insurance was included left people with less to worry about. People hoped these policies would eventually pay off their mortgage capital at the end of term. Not only was it thought that this would be possible but also that their investments would make an additional healthy sum which they could use for their own purposes.

Unfortunately, things have not gone as planned for many Endowment Mortgage holders. Many people have been informed that their policy is unlikely to generate enough money to pay off their mortgage capital. The shortfall which on average is any thing between 4% to 8% still has to be made up somehow. Some people have opened up saving’s accounts that are of less risk like an ISA.