Repaying an interest only mortgage.

You could have one or multiple repayment strategies in place to repay your mortgage at the end of the term, such as:

• Selling the property and downsizing
• Selling another property
• Pension lump sum
• Investments
• Or endowment policies.

It’s important you regularly check that your repayment strategy is on track to provide sufficient funds to repay the full amount due at the end of your mortgage term.

If you don’t have a repayment strategy in place or, are concerned you may not be able to repay your interest only mortgage, speak to us to review other options as soon as possible. We will be happy to work with you to try and find an alternate solution to repay the balance. Either with us, for example with a term extension and/or switch to a repayment mortgage, or by providing you with other alternative options to consider.

You can also get help from other sources such as a mortgage broker, financial adviser or MoneyHelper.

To make sure you are kept informed and that you have adequate time to prepare for the repayment of your mortgage we will contact you at various stages throughout your mortgage term.

You can also check details such as your remaining term by using our online service.

If you are an expat member, or you do not wish to go online, we can provide you with your current balance, just give us a call or email us at [email protected].

• The funds to repay the mortgage will need to be available by the time the term expires. So, ensure the property is listed for sale with enough time to complete prior to the expiry of your mortgage term.
• If you are planning on downsizing make sure you will have enough equity to purchase a new home in your preferred location. Further details can be found in our Downsizing Guide.

• Ensure the policy/ies hold enough funds to cover the full balance due on your mortgage.
• If you can only draw a portion of the funds, ensure this portion will cover the balance due.
• If there is a shortfall compared to the amount required, ensure you have other funds or plans in place, to clear the balance due.
• If notice is required for withdrawal, make sure this is requested in time to meet the due date for repayment your mortgage.
• Where you are planning to use a pension, ensure you will have enough funds left over to support your retirement plans.

• Ensure that the overpayments you are making have been calculated to cover the balance due, or reduce the balance in line with other repayment strategies available.
• Many lenders will not accept overpayments as a valid strategy, and there is a risk of not being able to clear the balance if you find you are unable to make the amount of overpayments intended.

• A switch to capital repayment is a good way to ensure repayment of your mortgage, especially if your original plans have changed.
• If payments are affordable on a repayment basis, this will ensure that your mortgage debt is cleared by the time the term expires, without having to rely on an alternate strategy. As long as all payments are made in full and on time.
• This may be combined with a term extension, to keep the mortgage payments to an affordable level.
• You can use our monthly payment calculator to see how a switch to capital repayment may fit with your budget.

• Remortgaging to another lender at the end of your term is a risky strategy. This is because mortgage criteria changes frequently, and you may find that you are unable to find another lender prepared to loan to you years from now.
• A remortgage in the next 6 to 12 months may offer an effective strategy. This is because this will provide an adequate amount of time to review your options with other lenders. With many lenders providing a mortgage offer of 6 months this removes the risk of them not being able to assist by the time your term ends.
• You will need to ensure you consider the expiry date of your existing mortgage and any Early Repayment Changes attached when planning when to consider a remortgage.
• You may wish to enlist the help of a mortgage broker, if you are considering a remortgage to repay your interest only mortgage.

If you are unable to clear your mortgage when your term expires using your intended repayment strategy, you may be forced to sell the mortgaged property to repay the mortgage. Therefore, it is good practice to start alternative planning sooner than later if you think you may not be able to repay the mortgage when it becomes due.

If you are worried about making your mortgage payments or repaying your mortgage at the end of an interest only period, we’re here to help. Whatever your situation we’ll do our best to find a solution, so it’s best to speak to us as soon as possible.