Explaining the Policy: Endowment mortgages are an interest-only mortgage associated to an endowment policy. The borrower has to make two separate agreements before receiving the approval. One agreement is with the lender for the mortgage and other with the insurer for the endowment policy. The borrower has the right to change any of these two agreements if he wishes to change. If the investment in the endowment policy grows at a reasonable rate then the policy can produce enough amounts to pay off the loan at the end of the mortgage term. Benefits and Shortfalls of Endowment Mortgage: Endowment mortgages are attractive to some people as the monthly payments would cover only the interest charged on the loan and do not include any repayments of the capital repayment. This type of loan offers you to have more control over the money and allows you to provide a good way of saving and investing your money. There are two major drawbacks of the policy. There is no assurance that a policy will grow enough to produce the profits. The second drawback is the very low cash-in value of the endowment policy if you stop paying the premiums in the early years.