A choice of repayment methods
We offer you a choice of three methods of repaying your loan: ‘repayment’, ‘interest only’ and ‘mixed’.
1. Repayment
With this method you repay your loan, and interest charged, in monthly instalments over a term you have agreed - which can be up to 30 years. In the early years your monthly payment is mainly interest, with only a small proportion repaying the capital. Over time, the amount you owe reduces, until you have repaid the full amount borrowed.
2. Interest only
Alternatively, you may choose the interest only method of repayment. Here, the capital amount of your loan remains as a standing debt to us until the end of the term of your mortgage and is then repaid, by you, in full. You pay interest only on the loan during the term of the mortgage.
If you choose this method, it is your responsibility to ensure that you have also arranged an appropriate repayment plan to repay the outstanding debt, in full, at the end of the agreed term.
You must check your repayment plan regularly to see that it is on target to repay the amount of your mortgage. You must also ensure that your repayment plans are kept up-to-date and continue to provide you with the level of cover required. Failure to provide for the repayment of the loan, at the end of the term, will result in your total loan being in arrears and we may take action against you.
If you move house, you can usually transfer your existing repayment plan to your new loan with us. If you decide to cancel your repayment plan before it has run its full term and to transfer to the ‘repayment’ method of repaying your loan, the surrender value of your repayment plan may, in the early years, provide only a limited or no return on the payments you have made.
3. Mixed
You can arrange to repay your mortgage using part repayment and part interest only. With a mixed mortgage, your monthly payment is made up of the interest charge for the whole loan plus a capital repayment to pay back the repayment part of the loan only, over the term agreed. It is your responsibility to ensure that you have in place an appropriate repayment plan to repay the outstanding interest only part of your loan at the end of the agreed term. You must check your repayment plan regularly to see that it is on target to repay this part of your mortgage.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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