The mortgage repayment methods available to you with The Cambridge
The decisions you make about your mortgage are some of the most important financial choices you will ever make. Whether you are a first-time buyer or already have a foothold on the property ladder, The Cambridge almost certainly has a mortgage that will be suited to your needs.
We offer you a choice of three methods of repaying your loan: ‘repayment’, ‘interest only’ and ‘mixed’.
With this method you repay your loan, and interest charged, in monthly instalments over a term you have agreed - which can be up to 40 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. Each month you only pay the interest on the loan during the term of the mortgage. 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.
If you choose this method it is your responsibility to ensure that you have also arranged an appropriate repayment strategy to repay the outstanding debt, in full, at the end of the agreed term.
You must check your repayment strategy regularly to see that it is on target to repay the amount of your mortgage. You must also ensure that your repayment strategy is kept up-to-date and continues 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.
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 strategy to repay the outstanding interest only part of your loan at the end of the agreed term. You must check your repayment strategy regularly to see that it is on target to repay this part of your mortgage.
Compliance with the terms and conditions of the regulated mortgage contract does not ensure repayment of the total amount of credit.
Variable or fixed interest: which is best for you?
We offer two different mortgage interest options: ‘Variable’ and ‘Fixed’. Our Mortgage Advisers will talk you through these options and recommend an interest option to meet your needs based on what you tell us.
Variable rate mortgages
A variable rate mortgage means that the interest rate you pay may change during the term of the mortgage. This will result in changes to your monthly payments. When you pay our Standard Variable Rate, we will offer you a Cambridge Variable Mortgage, which gives you a number of flexible features.
From time to time we offer special discounts on our Standard Variable Rate. If the variable rate changes during the discounted period of the mortgage term you are still guaranteed to receive the same level of discount. If you opt for one of these special discounts, during the period of the discount we may not provide you with some or all of the flexible features.
Following a change in your interest rate, your monthly payments will be adjusted accordingly and you will be personally notified of your new monthly repayments. We also recalculate your payment at the end of any discount period.
Fixed rate mortgages
Fixing your interest rate for a set period guarantees that your rate will not go up or down. This will help you to budget your monthly outgoings.
At the end of the fixed rate term, your loan transfers to our Cambridge Variable Mortgage and you pay our Standard Variable Rate for the remainder of the mortgage term. We will recalculate your monthly payment to reflect any change to the interest rate.
Tariff of mortgage charges
Our Tariff of Mortgage Charges uses the industry's good practice principles to make our fees and charges easy for you to understand. This same document is being used across the industry to help customers compare mortgages.
When looking at the fees that other firms charge, you may notice some that don’t appear in our tariff. This means we don’t charge you these fees.
Considerations if you're appointing a guarantor
One way that people choose to get on the property ladder is to use a guarantor, with a parent or close family member taking on the responsibility of ensuring the mortgage will be repaid. This means that if you, the buyer, miss your mortgage repayments, your guarantor covers them on your behalf.
The Cambridge recommends that you and your guarantor take independent legal advice before entering into an agreement so that you are fully aware of the commitment and potential consequences involved.
We have a help guide which provides useful information for guarantors.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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