An endowment mortgage is very similar to an Interest Only mortgage with one main difference. The difference is that an amount of money is paid into an endowment saving vehicle that will pay off the capital at the end of the mortgage term. The endowment is often linked to the stock market. This means that if the stock market increases at the expected rate over the period the capital will be paid off in full and sometimes a little is also left over for you to spend as you wish. However, the stock market is a difficult animal to predict. The endowment mortgage was very popular a few years ago but because the stock market has not preformed as the experts believed over the last 10 years a lot of people now have short falls in the capital that must be paid back at the end of the term.

An endowment mortgage looks good on paper and may save money but you must also understand that the end payment received is only an estimate and maybe higher or indeed lower than the company suggests. There is a degree of risk with an endowment that you must understand before agreeing to purchase.

Type Of Mortgages