Traded Endowments Guide

An endowment is a financial product that, in the past, was commonly sold as a way to pay off mortgage capital. The holder would pay a monthly sum into a fund which was linked to the financial markets. The theory was that, upon maturity they would then have benefited from the rise in value of the stock market and the sum would pay out in cash to cover all or part of their mortgage.

Unfortunately due to the recent stock market crash many people with endowments have been left with funds that are worth nothing compared to what they had expected, and thus paying your mortgage by linking it to the market has gone out of fashion.

As a consequence endowments are not so common today as they used to be, but the trade of them now exists allowing you to cash-in your endowment and put the fund into your mortgage early by selling it to a specialist firm. The firms are taking a risk by probably paying you over the market rate of what the endowment is worth because they are banking on rises in the market but if you are trading you can’t afford to wait for those rises to happen and so both parties can potentially benefit. It is worth checking with your financial advisor as to the worth of your endowments and seeking advice before making a trade.

You can find an IFA to advise you on trading an Endowment by using our search facility on the right, or by browsing through the counties on the left to find IFAs in your town.