Understand your mortgage payment options.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Find out how long you can take to repay your mortgage and discover the differences between repayment and interest-only mortgages. Plus, we'll explain how to pay your mortgage by Direct Debit, which can save you time and hassle.
More details and FAQs
Some of our mortgages carry a charge if you repay all or part of your mortgage in the early years or switch to a different mortgage - these are called early repayment charges.
How much can I repay without having to pay an early repayment charge?
If you want to pay off part of your mortgage or make overpayments where there is an early repayment charge, as a current concession you can repay up to 10% of your mortgage balance each year without having to pay the charge.
The 10% is calculated using the balance as at 1 January of the year in which you make the repayment.
If you repay up to 10% and then repay the remainder of the loan in full within six months, the early repayment charge will also be charged on the 10% you initially repaid.
The 10% overpayments limit is a concession and could be withdrawn on giving three months notice.
Where there is no early repayment charge period or it has expired you can repay the loan in full or in part whenever you want.
Moving home with your current mortgage deal
If you move home, you may be able to take the terms of your current mortgage deal with you. This could be so you:
Taking your current deal with you means that, when you repay the mortgage on your current home to move, you take out a new mortgage on your new home for at least the same amount.
In other words, any fixed rate or tracker would continue to apply for the remainder of the original deal period; and, if there's an early repayment charge on your mortgage, you won't have to pay it. The charge would still apply though if, after you'd moved, you subsequently repaid the mortgage (or more than 10% of it) while you were still benefiting from the fixed rate or tracker.
If there's a delay in your move
If there's a delay between repaying your current mortgage and taking out a new one on a new property, then you will have to pay any early repayment charge but in certain circumstances it may be refunded once your new mortgage starts.
If you need to borrow more
If you want to take your current deal with you when you move, but borrow more on top, you could apply to borrow extra on the basis of our other mortgage deals available at that time.
It's also important to note that our lending policy at that time will also apply, and this could be different from the policy that applied at the time of your most recent application.
In some cases - for example, where you want to borrow more in relation to your income than we are prepared to lend on standard terms - the additional borrowing will only be agreed if the whole of your new mortgage is on specific terms.
This may mean that you will be unable to transfer the terms of this mortgage as described above.
If you're borrowing less
If you move and want to take your mortgage deal with you, but your new mortgage is for a smaller amount, any early repayment charge that you have to pay will be based on the difference between the two mortgages.
If you're borrowing less and there's a delay between repaying the current mortgage and taking out the new one, the paragraph above - 'If there's a delay in your move' - applies, but the amount refunded will be calculated proportionately.
If your mortgage began before 1 November 2008, a different policy may apply, please call our Helpline on 0345 835 3380 for details.
Depending on what type of mortgage you have, we may vary the applied rate during the mortgage term.
If you have the Standard Variable Mortgage Rate
We may change the rate at any time. This will usually be because general interest rates have changed or to reflect market conditions. But even then, the rate will never be more than 2% above the Bank of England base rate.
If you have a Fixed-Rate Mortgage
The interest rate will not change throughout the fixed-rate period.
If you have the Homeowner Variable Rate or the Buy-to-Let Variable Rate
We may change the Homeowner Variable Rate or the Buy-to-Let Variable Rate at any time. Usually because general interest rates have changed or to reflect market conditions. But it can only happen for one of the reasons detailed in our mortgage conditions.
How will I know if my interest rate changes?
If we make a change to an interest rate, you will be notified of the change before it happens. We will write to you with details of the new rate and:
If you are coming to the end of a tracker or fixed rate period, we will normally write to remind you and to give you details of any payment change.
How interest is calculated
Interest is calculated on all new mortgages using the balance outstanding each day (daily interest) and it's then added to the mortgage at the end of each month. This means that whenever your balance changes - for example when you make a payment, interest starts to be charged on the new balance straightaway.
If you already have a mortgage with us and are moving home or borrowing more with a Homeowner Loan, it may be that, currently, interest on your existing mortgage is calculated annually. If this is the case, we will change it to daily interest when your new mortgage or loan starts so that interest on your whole mortgage will then be calculated daily.
Even if you're not moving or borrowing more, if your interest is calculated annually, you can ask us to calculate it on a daily basis instead.
What happens if I make extra payments?
If the interest on your mortgage is charged on a daily basis, any extra payments you make will reduce the balance straightaway, and interest will then start to be calculated on the lower balance immediately.
The applied rate and the APR
You will often see two rates quoted by lenders - the 'applied' rate and the 'APR'. Like this for example:
The applied rate is the actual rate used to calculate the interest due on a loan, i.e. it's the rate you pay.
So, in the example above, the actual interest rate charged is 5.19%. Depending on what type of mortgage you have, this rate could change. See the previous section, 'Rate changes', for more information about this. The interest due is usually payable monthly.
The APR (annual percentage rate) is intended to help you compare the true overall cost of loans offered by different lenders - so it takes into account not only the applied rate, but any costs such as product, valuation and administration fees, the term of the loan and whether it is on an interest-only or repayment basis. This means that two mortgages could have the same applied rate and the same mortgage term, but if one had more charges for example, then the APRs could be different. You will always see an APR quoted alongside the applied rate in any mortgage advertising. The APR quoted is expected to represent the APR at or below which at least two thirds of the target audience will be charged.
Get an indication of how much your mortgage repayments will be.
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