Do you have an interest only mortgage?

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 and 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 providing you make your monthly payments in full and on time, your mortgage will be fully repaid at the end of its term.

Alternatively, you could have a part & part mortgage, where a set portion of your mortgage is on a repayment basis and another set 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

It’s important you’re fully aware of the type of mortgage you have, so you can plan ahead. If you’re unsure, you can easily find this information using Self-Serve, our secure online mortgage service, which is available 24 hours a day, 7 days a week. See our website section about finding your account information for more information.

You can also see your latest mortgage statement or check your latest mortgage offer documents. Alternatively, if you need further support, please contact us.

Make sure you have a plan to repay your balance

Whether you’re a homeowner or a buy to let landlord, if you have an interest only (or part & part mortgage), you need to have a plan in place to repay the amount you borrowed at the end of your term.

To help give you as many options as possible, you should make a plan to pay back your original loan or minimise any potential shortfall.

If you don’t yet have a plan, it’s never too late to get started. The sooner you act, the more options you’re likely to have.

See your options

If you can’t repay your balance

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.

We may need to take action to repossess your home or property if you’re unable to pay the full amount at the end of your term – and if you sell your home or investment property, you could be taken to court to recover any shortfall if the sale price achieved does not cover the balance you owe.

Tell us your plans

However you intend to repay your interest only mortgage, it’s important that you get in touch and tell us your plans.

If you’re unsure how you might repay your loan or don’t have a plan yet, we can guide you through the different options available and highlight sources of independent advice which may be helpful.

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