Quizzes & Puzzles13 mins ago
Endowment Mortgage
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Are there any companies that still offer endowment mortgages. I,m trying to help my son buy a house with a garden without having to move miles away.
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Endowment mortgages, per se (i.e. where the whole thing came packaged together), no longer exist.
However some lenders offer 'interest only' mortgages, where the borrower has to show that they've got a viable plan to ensure that they will have enough money at the end of the loan period to pay back the capital. That plan can be an endowment policy but it's more likely to be some other form of investment, such as unit trusts. The Government tightened up the rules in 2014, meaning that the maximum which can be lent on an 'interest only' mortgage is 75% of the value of the property (thus requiring a whacking great 25% deposit) and requiring lenders to carry out periodic checks to ensure that the borrower's repayment plan is on course. Some lenders also have particularly strict rules about who'll they'll give 'interest only' loans to. (e.g. Virgin Money won't lend to anyone earning less than £50,000 p.a.).
Other lenders in the field (who might not quite such a strict requirement about income) are Barclays, Post Office, HSBC, Halifax, Leeds Building Society, Skipton, Nationwide, TSB, Chelsea Building Society and Yorkshire Building Society. (I've based that list upon a quick bit of googling but I can't guarantee that it's up to date).
However, because the loan and the plan for repaying it are now two separate things (rather than a 'bundle', as in the days of endowment mortgages), it's likely that you'd need to consult a financial advisor to find the best way forward.
However some lenders offer 'interest only' mortgages, where the borrower has to show that they've got a viable plan to ensure that they will have enough money at the end of the loan period to pay back the capital. That plan can be an endowment policy but it's more likely to be some other form of investment, such as unit trusts. The Government tightened up the rules in 2014, meaning that the maximum which can be lent on an 'interest only' mortgage is 75% of the value of the property (thus requiring a whacking great 25% deposit) and requiring lenders to carry out periodic checks to ensure that the borrower's repayment plan is on course. Some lenders also have particularly strict rules about who'll they'll give 'interest only' loans to. (e.g. Virgin Money won't lend to anyone earning less than £50,000 p.a.).
Other lenders in the field (who might not quite such a strict requirement about income) are Barclays, Post Office, HSBC, Halifax, Leeds Building Society, Skipton, Nationwide, TSB, Chelsea Building Society and Yorkshire Building Society. (I've based that list upon a quick bit of googling but I can't guarantee that it's up to date).
However, because the loan and the plan for repaying it are now two separate things (rather than a 'bundle', as in the days of endowment mortgages), it's likely that you'd need to consult a financial advisor to find the best way forward.
I totally agree with Chris. I can't see any case for an endowment mortgage and I would be surprised if anyone would offer one given the huge issues with misselling claims. Interest only mortgages are still available and will mean lower repayments initially but lenders will need convincing that there is a vehicle in place or good plans for one so that the capital can be repaid at some stage
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