Tuesday, April 02, 2024

The Legacy of Endowment Mortgages

Endowment mortgages, once a popular choice for homeowners, have seen a significant decline in recent years due to a series of mis-selling scandals². These mortgages were designed as a monthly savings plan, typically invested in shares and property, with the aim of paying off the home loan at the end of the term². However, many policyholders have faced shortfalls in the expected payout of the endowment².

Current State of Endowment Mortgages³

In the wake of these scandals and years of negative press, endowment mortgages have been consigned to history³. As of now, you cannot get an endowment mortgage³.

A Case Study: Cashing in Endowments¹

A recent query to The Guardian asked whether it would be wise to cash in an endowment to pay off an interest-only mortgage¹. The reader had an endowment valued at about £51,000, which was about £10,000 more than their current mortgage¹. They were considering cashing in the endowment, paying off the £41,000 interest-only mortgage, and using the £200 a month they were currently paying for it to overpay on their repayment mortgage¹. The expert response suggested that this could be a good idea, as long as the reader did not need the life insurance provided by the endowment¹.


Endowment mortgages, once a popular choice, have seen a significant decline due to mis-selling scandals and subsequent shortfalls in expected payouts. While they are no longer available, those who still hold endowments are left with decisions on how best to manage them. As always, it's important to seek expert advice when making such decisions.

*Please note that this blog post is a summary of recent news articles and does not constitute financial advice. Always seek professional advice before making financial decisions.*


(1) Endowment mortgages: Legacy of a scandal - BBC News. https://www.bbc.co.uk/news/business-20858236.
(2) Endowment mortgages – are they still available? | Ideal Home. https://www.idealhome.co.uk/property-advice/endowment-mortgages-304804.
(3) Should I cash in my endowment and pay off my £41,000 interest-only .... https://www.theguardian.com/money/2022/sep/26/should-i-cash-in-my-endowment-and-pay-off-my-41000-interest-only-mortgage.
(4) A guide to endowments | This is Money. https://www.thisismoney.co.uk/money/mortgageshome/article-1583977/Endowments.html.
(5) New mortgage deal falls below 5% in ‘watershed moment’ for UK .... https://www.theguardian.com/money/2023/nov/09/new-mortgage-deal-below-5-percent-watershed-moment-uk-homeowners.

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