How can I repay my mortgage?

Once you’ve decided on the type of mortgage you want, you’ll need to decide how to repay it. The main decision involves deciding between repayment (capital and interest) or interest only.

Whichever mortgage you choose, you’ll need to repay the capital (the amount you’ve borrowed) and pay interest – usually on a monthly basis.

How and when you repay the capital depends on whether you choose to arrange your mortgage on a capital and interest or an interest only basis. 

Repayment (Capital and Interest) mortgages

This arrangement involves paying back the interest and part of the capital on a monthly basis until the entire amount borrowed is eventually paid back over the mortgage term.

You have the reassurance that your mortgage will be repaid in full at the end of the term, as long as you make all your monthly payments.

You should take careful note of the fact that no life cover is included with this type of mortgage. We would strongly advise you to protect your family home by making sure you’ve enough life cover to pay off your mortgage in the event of your death.

Interest Only mortgages

With an interest only mortgage you will only make payments towards the interest on the capital you’ve borrowed, not the outstanding balance. This means that you will still owe the full amount borrowed on an interest only basis and any interest accrued under your mortgage at the end of the mortgage term. You will need to have a clearly understood and credible repayment strategy in place to repay this. All repayment strategies will be subject to approval by our mortgage underwriters. Please note that we will only offer interest only mortgages in limited circumstances.

It is your responsibility to ensure that you have sufficient funds to repay the amount borrowed on an interest only basis and (where applicable) any accrued interest at the end of the term. This could be using a savings or investment product, such as an endowment, pension or ISA, or the sale of the mortgaged property or a combination of these. However, if you intend to sell the mortgaged property and this is your main residence, you must ensure that it is likely to provide you with enough funds to repay the loan and (where applicable) any accrued interest and allow you to buy another cheaper property. Whichever option you choose, you must review your plans regularly to make sure you are on track to pay off the mortgage and (where applicable) any accrued interest on or before the end of the mortgage term and make changes if necessary. At some point during the term of the mortgage we'll contact you to check that your repayment strategy is still in place and that it is still reasonable to expect that your repayment strategy has the potential to repay the amount borrowed and (if applicable) any interest accrued (or reasonably expected to be accrued) under the mortgage at the end of the term.

The Society cannot advise you on the suitability of any particular repayment strategy. If you have any questions regarding the suitability of a repayment strategy, you should speak to an independent financial advisor.

No life cover or critical illness cover is included with this type of mortgage and we would strongly advise you to protect your family home by making sure you’ve enough life cover and critical illness cover to pay off your mortgage and (where applicable) any accrued interest in the event of your death, or if you were unable to work due to accident or sickness.

If you choose to borrow all or part of the loan amount on interest only terms, a maximum of 50% loan to value (LTV) applies. This means we will only lend you up to half the value of the property. If you intend to repay your mortgage in full at the end of the term through the sale of the property, then you must hold a minimum of £150,000 equity in the property at the point of application.