An endowment mortgage is a form of interest-only mortgage. The endowment policy is a combination of savings, investment and life assurance all wrapped up in an insurance policy. The life assurance part, merely ensures that the mortgage is automatically paid off should you die during the term of the mortgage.

Unfortunately, many endowments are failing to meet expectations, one of the reasons being that their charges are extremely high. The other reason is that investment returns have fallen in recent years. It is important to remember that endowments may not cover their mortgage. In many cases, endowment policies were mis-sold (for example, many people were told that the policies were guaranteed to pay off their mortgage, but this was never the case). In view of their growing unpopularity, very few mortgage lenders now offer them. Good job too! Endowments are inflexible, high cost, underperforming investments and shouldn't be touched with a barge pole in our view.