Interest only mortgages

Reviewing your mortgage repayment plan

Your monthly repayments only pay off the interest on the amount borrowed. At the end of the mortgage term, you must pay off the amount you borrowed when the mortgage began.

To do this you can use savings, investments or other assets you have. We call this a 'repayment strategy'.  

If there is a chance of a shortfall, there may be simple changes you can make. You could make overpayments on your mortgage or switch to a repayment mortgage.
Acceptable Repayment Strategy Policy Rules
Sale of Mortgage Property at the end of term
  • You can use this to cover up to 60% of the value of the property.
  • Total borrowing is up to a maximum 85% LTV when borrowing on a Capital Repayment basis (a maximum of 75% can be on Interest Only by using an additional repayment strategy).
  • For Interest Only lending the property must have a minimum equity of £250,000 at the time of application for non-London properties and £300,000 for properties located in London. For Part Interest Only & Part Repayment lending the minimum equity requirements are calculated at the end of the mortgage term. To check if the property meets our definition of London, please enter the postcode here.
Sale of other UK property
  • You can use up to 75% of the equity in the property as your repayment strategy.
  • The property must be in the UK.
  • The property must be in your name/s only with no one else named.

Evidence required
A copy of the latest mortgage statement if any property is mortgaged by a different lender.
Pension Lump Sum
  • For defined contribution schemes and Self Invested Pension Plan (SIPP) – You can use up to 60% of the tax-free lump sum (15% of total pension pot) towards your strategy.
  • For defined benefit schemes – You can use up to 90% of the tax free lump sum.
  • You must be older than 55 at the end of your full mortgage term.
  • Your declared retirement age must be at or before the end of the term of the mortgage.

Evidence required
Latest Pension Statement.
Savings
  • The current value of the savings must cover 100% of the interest only part of your mortgage. The total can include the eligible investments referred to below.
  • You must have had the savings for at least 12 months.
  • The savings must be in pounds sterling.

Evidence required
Latest savings statement.
Existing Endowments
  • The projected mid-point maturity value must cover 100% of the interest only borrowing.
  • The endowment must have been in place for at least 12 months.
  • The end of the endowment term must not be after the end of the mortgage term.
  • It must be a UK Policy provided by a regulated firm.

Evidence required
Latest endowment policy statement, dated in the last 12 months.
General Investments
  • The current value of the investments must cover 100% of the interest only borrowing. The total can include eligible savings referred to above.
  • The investments must be in pounds sterling.
  • The investment must have been in place for a minimum of 12 months.

Evidence required
Stocks and Shares ISA, Unit Trusts/OEIC, Investment Bonds: copy of latest statement. Stocks and Shares ISA: a copy of your share certificates/statements showing your share-holdings and their valuation.

As a responsible lender who puts customers at our heart, we want to help you make sure you can repay your mortgage.  

We've been contacting customers with interest only mortgages to discuss their repayment strategy. This is following guidance from the Financial Conduct Authority (FCA), who regulate mortgages. They've told mortgage lenders it’s good to contact customers to make sure they know what their options are.  

If there's a shortfall in your repayment strategy, our team of qualified mortgage advisers will contact you. They will talk through your current situation and may be able to work out a plan to support you. We will mutually agree any changes.  

Tell us how you intend to repay your mortgage

 

Telephone us

You can talk to one of our advisers on free phone 0800 138 1009. We are available from 9am to 5pm Monday to Friday and from 9am to 1pm on Saturdays.

Complete our online form

Fill in the form below. We'll need to take details for each account holder named on the mortgage and any repayment plans in place. 

If you wish to talk to us as well, we're happy to call you. At the end of the form, you can select if you wish us to call you, and when (morning or afternoon). If you select a call back, we'll be in contact within two working days.

Disclaimer

Your property may be repossessed if you do not keep up repayments on your mortgage.

If you have a Buy to Let property, then alternatively a receiver may be appointed (except in Scotland) to receive the rent and/or to sell the property. After sale, you will remain responsible for the payment of any mortgage shortfall debt.