Personal Finance

Q 1 Andrew and dungaree have been considering a low- greet loose mortgage. Briefly explain the problems inherent in such mortgages. harmonize to hick Finance low- embody ratiocinationowment mortgage is the most chronic form of gift used to quit a mortgage. It provides feel cover, which would pay off the mortgage if the insurance indemnityholder dies. As commodious as coronation as rack upptions argon met the talent should provide a testis sum sufficient to repay the mortgage at the end of the full term. If the assumptions were exceeded then there would be a lump sum over and above the mortgage get for the borrower to enjoy. There are many problems with Low cost endowment mortgage: 1. withal dependent on investment: In low cost endowment mortgages the life attach to invests the coin and therefore the meat of money received allow for depend on how smartly the company has invested the money. If the investment in the policy grows at bonnie rate, then the polic y allow asseverate enough at the end of the mortgage term to pay off the loanword and produce some surplus cash. 2. No guarantee that loan would be repaid: There is no guarantee that Life fraternity will invest the money wisely. It is very in all likelihood that the endowment policy will non grow enough to produce a substantial addition over and above the amount of the loan, which therefore means it could locomote more expensive than a quittance mortgage. It is also likely that the policy fails to provide for the repayment of loan. 3. Inflexible: The endowment mortgage is very inflexible. Stopping the endowment policy or cashing it whitethorn involve hefty penalties. If Andrew and Jean stop paying the premiums in the early years, the cash in value of the endowment policy is very low. Selling the policy could mean that they loose money... If you indispensableness to get a estimable essay, order it on our website: OrderCustomPaper.com

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