Endowment mortgage
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An endowment mortgage is a financial product offered mainly in the United Kingdom. It consists of an interest-only loan secured on a mortgage combined with an investment in the stock market. The customer pays the interest on the capital, thus saving money with respect to an ordinary repayment loan; the balance is invested in the endowment fund. In the stock market boom of the 1980s and 1990s it seemed plausible that at the end of the loan term, the investment would pay off the capital and leave a surplus for the customer to spend.
However, the stock market crash of the late 1990s showed that endowment mortgages were a gamble: they relied on stock markets growing faster than bank lending rates, and so transferred significant risk from the lenders to the borrowers.
The high-pressure sales of endowment mortgages to people who didn't understand the risks they were taking, or for whom the product was unsuitable, was ruled by the courts in many cases to be "mis-selling", and many banks have been forced to restore their customers to the financial position they would have been in had they taken out a repayment mortgage instead.