The interest rates charged on personal borrowings usually reflect the risk factor perceived by the lender that attaches to the borrower as a result of the borrowers previous financial transaction record. An endowment mortgage quote for those with a clear history will show rates that are extremely favourable and substantially less than unsecured bank borrowing. Those with a poor credit record will be charged at only slightly higher rates as the loan is used to purchase property and is secured on that property thereby ensuring that the lender is at minimal risk of not being re-paid.

There are several major credit checking and reference agencies in the UK including Experian, CallCredit and Equifax all of whom keep detailed financial records and credit histories of almost everyone in the UK. These organisations provide consumers, businesses and the public sector with information and analysis to help them make important financial decisions. Almost all lenders are members of these organisations and have access to their records. Members of the public can access their own credit record and can make representations if the credit history is in error. Probably the best record to have with these agencies is one of regular borrowing and satisfactory repayment indeed those who have never borrowed will have little history upon which lenders can accurately base an endowment mortgage quote.

This type of borrowing which is secured on property differs from straight repayment loans in that the capital sum borrowed is not repaid until the very end of the term by use of a matured insurance policy. There are three elements to an endowment mortgage quote being the total amount borrowed, which remains outstanding throughout the term, the cost of the monthly interest payments on the total amount outstanding which may vary according to prevailing interest rates and the cost of the premiums on the policy of insurance which will, at the policy maturity date, be used to pay off the amount of the initial borrowing.

Interest rates charged on the capital sum can be at a fixed rate throughout the term of the borrowing which does give certainty and security as to the amount of the monthly repayments however whilst borrowing on a fixed rate can protect from unexpected interest rate increases it also means that the borrower does not get the benefit of falls in interest rates. Variable rate borrowing means that interest rates fluctuate with the lenders own rates which are usually tied in to the Bank of England’s interest rates which are determined by the state of the National economy at any point in time.

When things go wrong you can complain. The process of making an FSA mortgage endowment complaint for endowment compensation is outlined by rules set out by


The Financial Services Authority

25 The North Colonnade,

Canary Wharf,


E14 5HS

Tel: 020 7066 1000


A complaint for endowment compensation is started by writing a formal letter, outlining the grounds of the claim, to the seller of the policy who will either admit liability and make an offer to settle or will deny responsibility. In the event that the seller’s response is unsatisfactory then an application for review can be made to the


Financial Ombudsman Service

South Quay Plaza

183 Marsh Wall


E14 9SR

Tel: 020 7964 1000


The Financial Ombudsman Service will reconsider the FSA mortgage endowment complaint and may order the policy seller to settle the claim. If the person who would otherwise be liable to pay the damages no longer exists, is no longer trading or is bankrupt then, in certain circumstances, an application for payment can be made to the fund of last resort :-


Financial Services Compensation Scheme

7th floor Lloyds Chambers

Portsoken Street


E1 8BN

Tel: 020 7892 7300