If you have an Interest Only mortgage the monthly payments you need to make cover the interest but do not reduce the amount you have borrowed.
It’s your responsibility to make sure you have a strategy in place to repay your loan at the end of the agreed term.
Your strategy may include the following:
- Sale of your home or other property
- Endowment Policy
- Individual Savings Account (ISA)
- Personal Equity Plan (PEP)
- Personal Pension
If your savings or investment plan isn’t on track to repay your loan, or you don’t have a repayment strategy in place, you could consider transferring all or part of the balance onto a capital and interest repayment basis so that the balance is repaid over a period which is affordable to you. If you don’t have a repayment strategy in place to repay your loan at the end of the mortgage term, you’ll still be liable to us for the balance outstanding and your home may have to be sold to repay the money owing to us.
We recommend that you review whether or not an Interest Only loan is still appropriate for your circumstances.