Help and support
If you have an interest only mortgage, the monthly payments you are required to make only cover the interest charged on the balance you owe. The payments don’t reduce the total amount you owe over time, so by the end of your mortgage term you’ll need to repay the outstanding balance to us as a lump sum.
If you don’t have a plan or are worried that your existing plan isn’t on track to pay the lump sum, there’s lots of useful information on our webpages that could help.
If you’re worried you won’t be able to fully repay the 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. We can guide you through various options that might be suitable for your situation and highlight sources of independent help and support.
Please call us on 0370 702 0065. Our dedicated team is available Monday to Friday from 8.30am to 5.30pm.
Some examples of how you might prepare to pay back your interest only mortgage
Here are some examples to illustrate the ways you could prepare yourself to be ready to pay back your interest only mortgage if you don’t currently have a plan.
Whilst these are not actual customer case studies, they’re useful examples of the type of situations that can occur and the potential plans that customers can put in place.
Please note – any mortgage contract variations that we agree to are subject to customers providing relevant information such as an expenditure assessment.
Mr Kensit had a small portfolio of three investment properties, which he’d built up as a long-term investment to provide for his retirement. We wrote to him, informing him that the term end dates of his three interest only mortgages were approaching and that the balances owed would need to be repaid, since we were unable to extend the terms.
When he called us to discuss his situation, Mr Kensit confirmed that he planned to sell two of his properties to allow him to repay the outstanding balance on the third property. He’d then use the rental income from his remaining property to supplement his pension income.
He felt that the letters we sent were helpful, giving him time to begin the sales process and ensure that the mortgages concerned were repaid in line with the term end dates of his mortgages.
As a customer with a single buy to let mortgage, Mrs Wright was concerned about potential interest rate rises in the future. She was aware that we were unable to offer fixed rates or other new deals, and that any increase in interest rates would mean higher payments on her mortgage. Mrs Wright had considered remortgaging for a better deal, but her current Loan to Value (which is the amount they owed compared to how much their property is worth) of 89% made it difficult for her to take advantage of better fixed rate deals available with other lenders.
Mrs Wright called to discuss her options, and decided to make a series of lump sum overpayments on her mortgage as and when she could afford to do so in the future. This would reduce the amount she owed and could improve the loan to value of her mortgage, assuming house prices remained steady or increased in the future.
It only took a few minutes to make her first overpayment, and by following this plan, Mrs Wright hopes to be in a better position to remortgage elsewhere before her mortgage term ends.
Mr Phillipson had two buy to let properties with interest only mortgages, and both were approaching term end. He called us to discuss his position, and we told him that we are unable to offer him a term extension or new mortgage deal.
As he did not want to sell either property but did not have the funds to fully repay the amount he owed, we suggested that Mr Phillipson could look to remortgage with another lender. We told him about the Unbiased website which he could use to find an independent mortgage broker who could help him look for the right deal.
Mr Phillipson used Unbiased and found a local mortgage broker who searched the market and successfully sourced a new lender who has provided a mortgage offer for both his properties.
When the remortgages complete, Mr Phillipson will be able to fully repay the outstanding balance he owes on both mortgages before they reach term end.
Sources of independent help
There are various independent organisations that can offer you help and support, which might be useful for you.
MoneyHelper is a government backed body that offers free, independent and impartial guidance to help you make the most of your money.
You can find a wide range of information about interest only mortgages by visiting the MoneyHelper website.
If you need further support, you can call their advisers of use the live chat service on their website.
Citizens Advice offer free, confidential and impartial advice on legal, money and other problems. They offer confidential advice online, over the phone, and in person through their local advice centres.
For online information or to find your local advice centre, visit their website.
You may wish to seek independent advice about your options from an independent 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 don’t have your own broker, you can visit the independent Unbiased website. You can use their website to find a broker who will then contact you to arrange an initial free, no-obligation discussion.
Once you’ve found a broker, we’d recommend you verify their details on the Financial Conduct Authority’s Financial Services Register.
To read more about remortgaging, please see the MoneyHelper website for further information. MoneyHelper is a government backed body that offers free, independent and impartial guidance.
Please note, this page contains links to external websites. We are not responsible for the content of external websites.