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How does an interest only mortgage differ from a capital and interest mortgage?
With an interest only mortgage the payments you make only cover the interest and you do not repay the original loan amount until the final date. For example, if you borrow £100,000 for 25 years, the full £100,000 will be payable at the end of the 25 year term. With a capital and interest mortgage, part of your monthly payments go towards repaying the loan, and the mortgage balance is repaid in full at the end of the term.
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Why have I received a letter regarding my interest only mortgage, when I am keeping up with my payments?
With an interest only mortgage the payments you make only cover the interest and you do not repay the original loan amount until the final date. For example, if you borrow £100,000 for 25 years, the full £100,000 will be payable at the end of the 25 year term. With a capital and interest mortgage, part of your monthly payments go towards repaying the loan, and the mortgage balance is repaid in full at the end of the term.
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I’m worried that I won’t be able to pay off my mortgage – what should I do?
Talk to us first – We’ll discuss your situation with you and help you work out what options are available.
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Will my home be repossessed if I can’t repay my mortgage when I am supposed to?
Repossession is only ever a very last resort – we will always do our utmost to work with you to find a better solution. However, you may have to sell your home to repay your mortgage if you don’t have an alternative repayment plan.
