All endowment mortgages are interest only, just they have an endowment attached.
The bank must not have considered the payment of the endowment into the affordability calculation, thus making it a viable, although not preferred option
In message , Phil Deane writes
Er, which seems to be what I said.
*IF* the lender was lending on that basis, then they were lending on a pure *interest only* basis, which is their prerogative, assuming no payment to a capital repayment vehicle. This would make the loan 'affordable'.It would appear that the use of an endowment as a repayment vehicle was imposed by the broker. That is despicable in these circumstances.
If they *really* wanted the mortgage, and the only way to do it was Interest Only, then that is the way they would have had to do it.
Who is to say that the broker did not have the customers best interests at heart by making sure a repayment method was in place? ( *cough* Commission
*cough* ) At that time the most common Interest Only Repayment method was an endowment.What would have been the alternatives at that point in time? That would not have the same associated risk as an endowment? But remaining Interest Only?
In message , Phil Deane writes
Remaining Interest Only.
The OP of this part of the thread said "The net result was that she did not earn enough to get a bank repayment morgage, but then was offered a Endowment morgage through their company. "
They were told that an endowment was the only way. Tish!
That is my question. What option for repaying the mortgage would they have had at that time which did not involve an endowment or the associated risks of an endowment?
If other options are available then yes he was wrong, If there was none, that would have been within budget then he could have been correct
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