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UK Endowment Mortgages An endowment mortgage is effectively an interest only mortgage with an additional savings plan in the form of an endowment policy. Monthly contributions are made to a Life Insurance Company who invest your money in the savings plan. Life insurance is built in to the savings plan so your mortgage is repayed if you die before the endowment policy reaches maturity. Endowment policies typically take two forms; 'with-profits' and 'unit-linked'. A 'with profits endowment' has two bonuses; a reversionary bonus and a terminal bonus. The reversionary bonus is paid each year and is guaranteed if the policy is maintained until its maturity date. The terminal bonus is paid on maturity of the policy and is dependant on the performance of the underlying fund. The value of a unit-linked policy is determined by the value of the underlying investment at the maturity date. The value of units on a unit-linked policy can go down as well as up. Advantages of Endowment Mortgages
Use Isa to pay off Mortgage ? An ISA mortgage is effectively an interest only mortgage with an additional investment plan in the form of an individual savings account (ISA). An ISA is a stockmarket based investment that benefits from tax free growth. Strictly speaking, an ISA is not an investment but a 'wrapper' within which an investment can benefit from tax free growth. Choosing an individual savings account is a subject in itself. (Individual savings plans replaced personal equity plans (PEP's) in the 1999/2000 tax-year, although PEP funds can remain invested.) Advantages
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