About interest only
If you have an interest only mortgage, your monthly payments only cover the interest charged on the balance you owe. Your payments don’t reduce the total amount you owe over time, so when your mortgage reaches the end of its term, you’ll need to repay this to us as a lump sum.
This is different to a repayment (capital & interest) mortgage. Here, your monthly payments cover the interest charged each month and also pay off some of the balance that you owe. This means that if you make all your monthly payments in full and on time, your mortgage will be fully repaid at the end of its term (excluding any mortgage exit fees).
Alternatively, you could have a part & part mortgage, where a portion of your mortgage is on a repayment (capital and interest) basis and another portion is on interest only. Here, your monthly payments will cover the interest charged on the whole amount you owe, but you’ll also be repaying part of that total balance each month. So unlike a full repayment mortgage, this means there will still be a lump sum to pay at the end of the mortgage term.
Find out what type of mortgage you have
Do you have an interest only or part & part mortgage? If you’re unsure, it’s easy to find out.
We regularly send letters to customers with interest only and part & part mortgages. So you can check to see if we’ve sent you a letter about this. Alternatively, you can view your latest mortgage statement or review your most recent mortgage offer documents.
You can also find this information using Self-Serve, our secure online mortgage service, which is available 24 hours a day, 7 days a week. If you’ve already registered, you can Sign In here. For more details, see our Using Self-Serve page.
If you’re still unsure, please contact us.
Make sure you have a plan to repay your balance
If you have an interest only or part & part mortgage, you need to have a plan in place to repay the lump sum you owe by the end of your mortgage term.
If you can’t repay your balance at the end of the term
If you’re a homeowner, we won’t always be able to extend the term of your interest only mortgage, and we don’t allow term extensions if you’re a buy-to-let landlord. We also can’t offer new mortgage deals or further loans to any customers.
When your mortgage term ends, if we can’t agree on how you’ll repay your outstanding balance, we may need to take legal action that could result in the repossession of your property. Of course, this is always the last resort and we’ll do our best to work with you to find a better outcome.
If you don’t have a plan or you’re worried you won’t be able to repay the outstanding balance you owe as a lump sum at the end of your term, please talk to us as soon as possible.
There may be ways we can support or assist you, and our experienced team are here to help.
Tell us your plans
However you intend to repay your balance, it’s important that you tell us your plans. We need an up-to-date record of your plan.
You can use our online Self-Serve system to tell us about your plan or update any information you’ve previously told us.
Your plan must be robust enough to ensure that you are sufficiently prepared to repay the lump sum at the end of your mortgage term. If you don’t have an effective repayment plan, we can guide you through various options that might be suitable and highlight sources of independent advice.
