Switch to repayment or part & part mortgage - Hyalite

Switch to a repayment or part & part mortgage

 

If you have an interest only mortgage, when your mortgage reaches the end of its term, you’ll need to repay the amount you owe us as a lump sum.

Unsure if you have an interest only mortgage?

It’s important you’re fully aware of the type of mortgage you have, so you can plan ahead. If you’re unsure, we can help you find out.

Read more here

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.

There are various ways you can prepare to pay back the balance you owe or minimise any potential shortfall. One way to do this is to switch to a repayment (capital and interest) mortgage.

Please note – if you’re a landlord, it’s not possible to switch your existing interest only buy-to-let mortgage to repayment or part & part. Instead, you could consider making overpayments.

Want to consider other repayment plan options?

You need to have a plan in place to repay your interest only mortgage. It’s never too late to get started and the sooner you act, the more options you’re likely to have

Read more here

Switch to repayment

With a repayment mortgage, your monthly payments cover your interest charged and they also gradually pay back the balance you owe. Your payments will be higher than with an interest only mortgage, but provided you stay on track with your monthly payments, the amount you borrowed will be completely paid off by the end of your mortgage term. You’ll also pay less interest in total over the term of your mortgage.

As a homeowner, switching to repayment could give you peace of mind that you won’t need to sell your house to repay the amount you owe to us at the end of your mortgage term – which might otherwise be the case if you don’t have an alternative repayment plan in place.

Depending on what happens with house prices, reducing your balance could also improve your loan to value ratio – which is the amount you owe compared to how much your property is worth. If you’re looking to remortgage, this could be beneficial, as many lenders offer cheaper interest rate deals on mortgages with lower loan to value ratios.

 

Switch to a part & part

If a switch to full repayment is unaffordable, you could consider switching part of your mortgage to capital and interest, whilst leaving the remainder as interest only. This is known as a part & part mortgage.

Here, your payments will cover the interest you’re charged and will also reduce your balance, although by a smaller amount than with a full repayment mortgage. As a result, the increase in your monthly payments will be less than if you made a full switch. Because part of your mortgage will remain on interest only, there will also still be an outstanding amount to be repaid in full at the end of your term, so you’d still need to consider this within your plan.

With a part & part mortgage, you can increase the portion of your mortgage on repayment in the future, if you can afford to do so. This would mean that your monthly payments would increase, but in turn it will also increase the amount of your loan that you’ll be paying off.

Switch to repayment or part & part calculator

Use our calculator to see the impact of switching from interest only to a full repayment or a part & part mortgage, in terms of the total amount of interest paid and the balance owed at the end of the mortgage term.

Using this tool

You’ll need to know your outstanding balance, current interest rate and how long is left on your mortgage. You’ll also need to have an idea of what percentage of your mortgage you’d like to switch.

Find out how to quickly see up to date information about your mortgage account

If your mortgage is made up of multiple sub-accounts, you won’t be able to use the calculator and you’ll need to call us to discuss your situation.

Please note – if you’re a landlord, it’s not possible to switch your existing interest only buy-to-let mortgage to repayment or part & part. Instead, you could consider making overpayments.

Understanding the results

Our calculator shows how switching to either a full or partial repayment mortgage reduces both the total amount of interest paid and the balance owed at the end of the mortgage term.

The results you’ll see are based on the information you have entered for your outstanding balance, current interest rate, remaining term and the percentage of your mortgage that you’d like to switch.

Our calculator uses a simple method to determine the amount of interest you’ll pay on your mortgage, by dividing the total amount of interest you’ll pay over a full year into 12 equal monthly amounts.

Since interest on your mortgage may be calculated differently (such as on a daily basis), then the actual impact of switching all, or part, of your mortgage to repayment may differ slightly to the figures shown in the calculator.

Our calculator also makes several other assumptions, including:

  • You make your standard monthly payment every month over the full remaining term of the mortgage.
  • There is no change to your interest rate over the full remaining term of the mortgage.
  • There are no fees or charges added to your mortgage.
  • There are no other changes to your mortgage which would result in a recalculation of your monthly payment. (e.g. changes to your remaining term or any overpayments)

Since some of these assumptions may not apply to your mortgage, the results of this calculator should only be used as a guide.

Use calculator

Making the switch

If you’re interested in changing to a repayment or part & part mortgage, please call us to discuss this with us. We don’t charge a fee to do this.

When you call, we’ll be able to provide an estimate of how your monthly payments will change and we’ll need to carry out an affordability assessment to make sure that your revised monthly payments will be affordable. We’ll also explain more about how to apply, if you decide this is right for you.

Changing repayment type won’t be suitable for everyone and there are various reasons why we might not be able to allow this. In some cases, we may also only agree to a temporary change in your repayment type for an agreed length of time.

 

How long the process can take

If we agree to your request to change the repayment type of your mortgage, we’ll typically write to confirm this change within two weeks. However, this could take longer if we need further information from you to support your request.

 

Making sure this change is right for you

We provide an ‘execution-only’ service for this type of change. This means that although we’ll carry out an affordability assessment, we won’t provide you with any advice or a personal recommendation.

To help you decide if the changes to your mortgage are suitable for your needs, we recommend that you speak to a mortgage broker. Please be aware that some brokers charge an advice fee for their services, so you may want to confirm this with them.

If you need to find a broker, you can visit the independent Unbiased website. Their website will help you match with a mortgage broker who will then contact you to arrange an initial free, no-obligation discussion.

Once you’ve found a broker, we recommend you verify their details on the Financial Conduct Authority’s Financial Services Register.

 

Other options to consider

Instead of changing repayment type, you could consider the benefits of making overpayments, which will help reduce your mortgage balance and the amount of interest you pay. That may help you to pay off your mortgage earlier or could mean that you’ll have more options to remortgage in future. Please see our dedicated page here.

 

Support if you’re struggling

If you’re looking to change repayment type because you’re worried about making your monthly mortgage payments or are already struggling, please call us and we’ll try to help. Simply talking to us won’t affect your credit file – and the sooner you get in touch the better, as there are often more ways we can help. See our contact details here.

You can also visit our Payment difficulties page to see a wide range of independent organisations offering advice and support.

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.

Contact us

Other information on our website that might be useful

Making overpayments

See the positive impact making overpayments could have on your mortgage.

Useful tools & calculators

Our calculators will help you plan and consider some of your mortgage options.

Redeeming your mortgage

Find out all the information if you’re redeeming (paying-off) your mortgage with us.

Find a better deal

Information and support if you’re looking to move your mortgage to another lender.

Please note, this page contains links to external websites. We are not responsible for the content of external websites. 

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