Mortgages From The Past And The Present

In the days gone past, taking a mortgage was not always easy. If you want to buy a house, it is likely that you will be overrun with plans from all kinds of finance companies and loan providers as they try to ensnare you. Each loan provider will advertise to you, the best possible loans that they have on offer. If you are checking out cheap mortgages, just relax. Most loan providers have an array of loans and mortgages to suit the needs of the house buyer.

in the modern world it is hardly possible to take care of all our necessities directly from our savings. Loan providers understand that and are willing to make available to you the ideal mortgage offer. Over the years we have seen various developments in the world of personal and housing finance. One popular type of mortgage that had emerged some time ago in the United Kingdom was the endowment mortgage.

Although endowment mortgages are relatively unpopular now, there was a time when people were of the opinion that this was a terrific deal. Endowment mortgages allowed people to pay only the loan amount every month. How would this translate into a lucrative venture for the loan companies? When taking out an endowment mortgage, the borrower was required to take out a life assurance policy for the period of the loan. These mortgages involved long term commitment and the duration was most often about twenty-five years. How did this help? The interest-only policy allowed the borrower to save up enough to repay the loan. However, if he was unable to do so, the life assurance policy that he had taken out would help foot the bill.

Sounds very stress-free doesn’t it? However, there was one tiny glitch. Now, the repayment of the loan would depend on the endowment funds. Thus, it became necessary that the funds into which the investments were made should perform well. However, things don’t give us time to prepare before they start going wrong.

After the initial popularity of endowment mortgages in a flourishing market where people actually got bonuses over and above their investment, there was bound to be a shift. A swing towards the wrong direction came in the early 1990s, when the UK markets plunged into recession. There was a major market collapse which adversely affected many endowments. The crisis was so bad that companies had to revert to repayment mortgages.

Endowment mortgages have never got over that debacle. And why should they? After all, the markets are swamped with all kinds of attractive loans. Make your mind up as to what kind of a loan you are looking for, and ready yourself for a possible inundation by loan offers of all kinds.