Friday, November 5, 2010

Endowment Mortgages : Some Great Advice Everybody Should Read

Now, an endowment mortgage is a loan that you can get on what is called the "interest-only" basis. This is when the borrower is planning to pay with one or more endowment policies. An endowment mortgage is mostly used in the United Kingdom by consumers and also the lender. They don't tend to think of this arrangement on a legal scale.

So, think about this, the borrower will have two agreements at his disposal that are separate from one another. The borrower is able to change the terms in either one of the agreement if he wants to. A long time back, the idea of such a policy (endowment) was thought of that extra push of security for the lender.

Back then, the lender would make sure that it was made legal to ensure that any money incurred from the endowment was to go to him instead of the borrower. Though sneaky and underhanded, this has not been done in this way for a very long time.

There are reasons why a person would choose an endowment mortgage and that is because the customer will only pay the interest on money (or capital) that was borrowed, this in turn would basically save money because it is different than the regular repayment loan.

With the repayment loan, the borrower will then have to make his payments to something called an endowment policy. The goal of this was so that the investment that was made through the endowment policy would be enough to cover the mortgage when the time came and then of course there would be the possibility of a little extra cash to play with.

Now remember, as with anything there are a few downfalls to getting or even being involved with an endowment mortgage. We will be discussing a few of these problems in the next few paragraph. Not they say one of the bad things about using an endowment policy to pay back a mortgage is that you really won't make ends meet in the long run.

Truth be told, back in the 1800's there was a big boom in selling endowment mortgages, it was going crazy, the buyers were told that they would see a high rate for the return of said policies (approximately 12% per year). Well, lo and behold by the 1990's the economy kind of fell out from under civilization and basically grounded all of these dreams into dust.


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