Switch your interest only mortgage to repayment or part & part 

If you have an interest only mortgage, when your mortgage reaches the end of its term, you’ll need to repay the outstanding balance to us as a lump sum.

There are various ways you can prepare to pay back the balance you owe or minimise any potential shortfall in the amount you can repay.

You can opt to pay off your balance gradually each month, by switching to a repayment (capital & interest) mortgage.

Switch from interest only to repayment

With a repayment mortgage, your monthly payments will be higher because as well as covering the interest you’re charged, they’ll also gradually pay back the balance you owe. But provided you stay on track with your monthly payments, the amount you borrowed will be paid off by the end of your mortgage term (excluding any mortgage exit fees). You could also pay less interest in total over the term of your mortgage.

Switching to repayment could give you peace of mind that you won’t need to sell your property to repay the amount you owe to us at the end of your mortgage term – which might otherwise be the case if you don’t have an alternative repayment plan in place.

Depending on what happens with house prices, reducing your balance could also improve your loan to value ratio – which is the amount you owe compared to how much your property is worth. If you’re looking to remortgage, this could be beneficial, as many lenders offer different deals on mortgages with lower loan to value ratios.

Switch from interest only to part & part

If a switch to repayment (capital & interest) is unaffordable, you could consider switching part of your mortgage to repayment (capital and interest), whilst leaving the remainder as interest only. This is known as a part & part mortgage.

Here, your payments will cover the interest you’re charged and will also reduce your balance, although by a smaller amount than with a full repayment mortgage. As a result, the increase in your monthly payments will be less than if you made a full switch. Because part of your mortgage will remain on interest only, there will also still be an outstanding amount to be repaid in full at the end of your term, so you’d still need to consider this within your plan.

If you can afford it, you can apply to increase the portion of your mortgage on repayment in the future. This would mean that your monthly payments would increase, but in turn it will also increase the amount of your mortgage that you’ll be paying off.

Making the switch

If you’re interested in changing to a repayment or part & part mortgage, please call us to discuss this. We don’t charge a fee to change the repayment type of your mortgage.

When you call, we’ll be able to provide an estimate of how your monthly payments will change and we’ll need to carry out an affordability assessment to make sure that your revised monthly payments will be affordable. We’ll also explain more about how to apply, if you decide this is right for you.

Changing repayment type won’t be suitable for everyone and there are various reasons why we might not be able to allow this. In some cases, we may also only agree to a temporary change in your repayment type for an agreed length of time.

How long the process can take

If we agree to your request to change the repayment type of your mortgage, we’ll typically write to confirm this change within ten working days. However, this could take longer if we need further information from you to support your request.

Making sure this change is right for you

We provide an ‘execution-only’ service for this type of change. This means that although we’ll carry out an affordability assessment, we won’t provide you with any advice or a personal recommendation.

To help you decide if the changes to your mortgage are suitable for your needs, we recommend that you speak to a mortgage broker. Please be aware that some brokers charge an advice fee for their services, so you may want to confirm this with them.

If you need to find a broker, you can visit the independent Unbiased website. Their website will help you match with a mortgage broker who will then contact you to arrange an initial free, no-obligation discussion.

Once you’ve found a broker, we recommend you verify their details on the Financial Conduct Authority’s Financial Services Register.

Other options to consider

Instead of changing repayment type, you could consider the benefits of making overpayments, which will help reduce your mortgage balance and the amount of interest you pay. That may help you to pay off your mortgage earlier or could mean that you’ll have more options to remortgage in future. Please see our dedicated page about making overpayments here.

No plan to repay your outstanding mortgage balance?

When your mortgage term ends, if we can’t agree on how you’ll repay your outstanding balance, we may need to take legal action that could result in the repossession of your property. Of course, this is always the last resort and we’ll do our best to work with you to find a better outcome.

If you don’t have a plan or you’re worried you won’t be able to repay the balance you owe at the end of your term, please talk to us as soon as possible.

There may be ways we can support or assist you, and our experienced team are here to help. We can’t offer you advice but will discuss your situation and help you work out what options are available to you. and highlight sources of independent advice.

Tell us your plans

We need an up-to-date record of your plan. You can use our online Self-Serve system to tell us about your plan or update any information you’ve previously told us.

Your plan must be robust enough to pay the lump sum at the end of your mortgage term. By sharing your plan with us we’ll be better placed to offer you support to keep it on track.

If you don’t have an effective plan, we can guide you through various options that might be suitable and highlight sources of independent advice.

Please note, this page contains links to external websites. We are not responsible for the content of external websites.