Which mortgage type is named after an endowment policy used to repay the loan at maturity?

• A. Pension mortgage
• B. Interest-only mortgage
• C. Endowment mortgage
• D. Repayment mortgage

Answer: (C)

The key idea is that this mortgage is tied to an endowment policy whose payout is intended to repay the loan at the end of the term. In an endowment mortgage, you take out the loan to buy the property and also pay regular premiums into an endowment policy. The policy is planned to mature at the end of the mortgage term, providing a lump sum to settle the outstanding loan. If the endowment performs well, the payout can cover the loan; if not, there’s a risk the payout won’t be enough.

The other options aren’t named for an endowment policy. A pension mortgage uses a pension fund to fund repayment; an interest-only mortgage repays the loan at the end from a separate savings plan, not specifically an endowment policy; and a repayment mortgage is gradually repaid over time from regular payments without relying on an endowment payout at maturity.