What is a mortgage repayment plan?
A mortgage repayment plan (sometimes referred to as a repayment vehicle or a repayment strategy) is the method used to repay an interest only mortgage at the end of the term. For example an endowment policy, pension, sale of property or a savings/investment plan.
Do you have a repayment plan?
If you have a repayment plan, please check to ensure it is on track. We recommend you do this on at least an annual basis. As a responsible lender, we will also contact you from time to time to remind you to do this.
Please carry out the following checks to see if your plan is on track;
- Review your mortgage statement
Check your latest mortgage statement to see how much you owe and when you’re due to repay. - Check how your plan is performing
Contact your endowment, savings or investment provider to see if your plans are on track to repay your mortgage at the end of the term.
If your repayment plan is tied to your pension, contact your provider or review your annual statement on the performance.
If you intend to sell your home to repay your mortgage, consider the value of your property. See how much equity you have available and if this would leave you with enough money after the mortgage is repaid. - Update your details online
Once you’ve completed your checks, please let us know by updating your details online. This is especially important if your circumstances have changed and your plan is affected so we can keep our records up to date. The earlier any potential issues are identified the easier it is for us to help you find a solution.
What if I don’t have a repayment plan or it is off track?
Firstly, you’re not alone if your plans are not on track. Lots of customers have changes in their circumstances that affect their repayment plan. The key thing is that you act now and contact us so we can help. You might have more options than you think. We have a number of solutions that could be available to you, including;
- Switching you to a full repayment or part interest only part repayment (known as part and part) mortgage
- Extending the term of your mortgage
- Making overpayments on top of your monthly payments
- If for any reason we are unable to help there may still be the option of a lifetime mortgage through our partner, Legal & General. Learn more about lifetime mortgages Link opens in a new window.
When you call it is a good idea to have as much information to hand as possible to help us understand your circumstances, for example:
- Your income and outgoings (including future expenses)
- Projected value of your repayment plan
- Any savings or retirement plans you may have
Frequently asked questions
Your mortgage statement will confirm whether your mortgage is interest only, repayment or a combination of both (part and part).
You can apply to change to a repayment mortgage at any time, and there is no administration fee for changing all or part of your interest only mortgage to repayment.
By changing to a repayment mortgage you will still pay the interest on your loan every month but you will also pay off a portion of the capital. This means that your payments will be higher but your overall mortgage balance will reduce. If you continue to make your contractual payment each month, in accordance with the terms and conditions of your mortgage, your loan will be repaid at the end of the mortgage term.
If you would like a quote for changing your mortgage to repayment, please call us on 0345 605 0500 (residential customers) 0345 602 4578 (buy-to-let customers).
If you have instructed your repayment plan provider to transfer the money to us, this should be done automatically on maturity of your plan. Otherwise, the money will be sent directly to you and you will need to forward this payment to us to pay off your mortgage.
To make a partial mortgage repayment, please call us on 0345 602 8301
To repay your mortgage in full, you will need a redemption statement
Please call us on 0345 605 0500 (residential customers) 0345 602 4578 (buy-to-let customers) to let us know when you will receive the funds to repay your mortgage.
To help you understand how to repay your interest only mortgage in relation to your personal circumstances you may want to speak to an independent financial advisor (IFA).
To find an IFA in your local area visit unbiased.co.uk or alternatively visit MoneyHelper for handy information on interest only mortgages.