Here’s a list of frequently asked questions…
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Ways we can help
We can change your payment due date to be earlier or later (for example, to match the date you get paid), as long as the new date is within the same month.
Important information about changing your payment due date:
- If your new payment due date is later in the month, this will mean that you’re charged more interest. This is because the amount you owe will be higher for longer.
- If you choose a payment date at the end of the month, you must make sure that we receive your payment in time to apply it to your account. This is important if you pay by bank transfer or using our online system.
You could convert all or part of your mortgage to repayment, so you pay off both the interest and the capital you’ve borrowed. This will increase your monthly payments, so you’d need to speak to one of our qualified mortgage advisors to make sure that it’s affordable. You can make an appointment by calling 0330 159 7152. Our phone lines are open Monday to Friday 8:00am – 8:00pm.
Important things to consider:
- The shorter the term remaining on your mortgage, the higher your monthly payment. You need to make sure you’ll be able to keep up the higher monthly payments
- As long as you make all your monthly payments, having a repayment mortgage means that your mortgage will be paid off in full at the end of the term.
Overpaying your mortgage means you can save money on the interest you pay. It can also help reduce the amount you need to pay back at the end of the term. We don’t charge any early repayment charges, so there’s no limit to the amount you can overpay by.
Important Information
- You should only overpay what you can afford. If you’re unsure whether overpaying is right for you, you may wish to seek independent financial advice to help you with your decision.
- Overpaying might not pay back the full amount you owe by the end of the term, so you may need to think about how you’ll pay back any remaining balance.
If you have an endowment policy, shares, Individual Savings Account (ISA) or other investment plan that you were saving for a rainy day, you might want to use this to reduce or pay off your mortgage.
Important things to consider:
- The value of savings and investments can go down as well as up so it’s important to check on the progress of your plan regularly to make sure that it’s on track.
- If you’re unsure whether using an investment policy to repay all or part of your mortgage is right for you, you may wish to seek independent financial advice to help you with your decision.
- If your savings or investment aren’t enough to pay back the full amount you owe by the end of the term, you may need to think about how you’ll pay back any remaining balance.
You might be able to get a cheaper mortgage with a new lender which could help make paying back your interest only mortgage more affordable. We recommend that you get independent whole-of-market mortgage advice to help you understand your options. There are many companies offering free advice but some organisations do charge for their services, so you should always check this first.
If you plan to sell your home to pay off your interest only mortgage you will need to think about where you’re going to live.
You may wish to:
- Use the equity from your home to buy a cheaper property with no mortgage
- Use the equity from your home to buy a cheaper property and have a smaller repayment mortgage
- Move into a rented property or with family
With each of these options (particularly the first two) you’ll need to make sure that you have enough equity in your property to make your plan work.
You will need to think about:
- How much is your property is worth and how much money will be left over after you’ve repaid your mortgage?
- How much would a cheaper property cost? Can you afford the difference?
- If you would need to maintain a smaller mortgage, how much could you afford to pay each month? And for how long?
- When will be the right time for you to move? Is it better to move sooner whilst you’re younger and in good health, rather than wait until later in the term?
If you’re planning to sell your property, our dedicated team can help you answer these questions. Call our them on 0330 159 7153. Phone lines are open Monday to Friday 08:30am-6:00pm.
If your mortgage has flexible features (you can call us or check your original Offer of Loan to confirm) then you may be able to take a payment holiday of up to three months.
Important information about payment holidays:
- Payment holidays are only suitable if your financial difficulties are short term and you’ll be able to afford the increase to your monthly payments at the end of the payment holiday.
- The missed payments will not be classed as arrears and will not be reported to credit reference agencies.
- If you have a repayment mortgage, the missed payments will be paid back over the remaining term of your mortgage. This will result in you paying more interest.
- If you have an interest only mortgage, the missed payments will be added to the amount you owe. This means that the amount you need to pay back at the end of the mortgage term will be higher and you will pay more interest.
If you’re unable to meet all or part of your mortgage payment, we might be able to accept a lower or even no payment for a period of time.
Important information about making lower payments:
- Paying less than your monthly payment is normally agreed to cover a temporary change in your circumstances, like being out of work or undergoing medical treatment. It isn’t a long-term solution.
- At the end of the agreed lower payments, we will need to agree a payment arrangement to pay back any arrears.
- Paying less than your monthly payment may result in your account going into arrears.
- Arrears are reported to credit reference agencies and this may affect your ability to borrow money in future.
- If your mortgage is in arrears, you’ll be charged more interest. This is because your mortgage balance will be higher than expected. The additional interest will increase the amount you owe and may reduce the equity you have in your property.
If you can afford your monthly payment or more, we may be able to agree a payment arrangement to help stabilise or reduce any outstanding arrears. The amount we agree will be based on your individual circumstances and how much you can afford to pay.
Important information about payment arrangements:
- Any overpayment arrangement will typically need to pay back any outstanding arrears by the end of the mortgage term.
- Arrears are reported to credit reference agencies and this may affect your ability to borrow money in future.
- If your mortgage is in arrears, you’ll be charged more interest. This is because your mortgage balance will be higher than expected. The additional interest will increase the amount you owe and may reduce the equity you have in your property.
If you have a repayment mortgage and need longer than the existing term to pay back the mortgage balance or outstanding arrears, we may be able to agree a term extension.
Important information about term extensions:
- Paying back your mortgage over a longer term will result in you paying more interest.
- You need to consider whether you can afford to pay the mortgage over a longer period, particularly if this goes past your retirement.
If you have a repayment mortgage and either need a reduced payment for a period of time or want to repay arrears at a faster pace, a temporary change in the type of mortgage you have – for example by temporarily converting a repayment mortgage to interest only – may be appropriate.
Important information about changing your repayment type:
- A temporary change of repayment type is normally agreed to cover a temporary change in your circumstances, like being out of work or undergoing medical treatment. It isn’t a long-term solution.
- When you switch back to your original payment method, your payments will increase. You need to be confident that you can meet these higher payments.
- We won’t report the temporary change to credit reference agencies.
- Arrears are reported to credit reference agencies and may be affected by a temporary conversion. For example, if before the temporary conversion your monthly payment is £250 and you have arrears outstanding of £250, we would report to credit reference agencies that your account is one month in arrears. If your monthly payment reduced to £50 as a result of the temporary conversion and the arrears remained at £250, we would report to credit reference agencies that your account is five months in arrears.
If you are no longer able to afford to live in the security property but have alternative accommodation that is affordable, we may agree for you to let the property for a temporary period.
Important information about letting your property:
- The expected rental income would need to be enough to cover the mortgage payments (and a contribution towards the arrears, where appropriate).
- You would be responsible for meeting any costs and legal requirements associated with letting the property, for example gas safety checks, letting agents etc.
If you would like to add your outstanding arrears to your mortgage balance, capitalising your arrears may be an option.
Important information about capitalisation:
- We’ll only consider this once your finances are back on track and you’ve shown that you can afford the increased monthly payments.
- Once arrears have been capitalised we will report the account as being up to date to credit reference agencies. If you miss any future payments, these arrears will be reported to credit reference agencies.
- If you have a repayment mortgage, the capitalised arrears will be paid back over the remaining term of your mortgage. This will result in you paying more interest.
- If you have an interest only mortgage, the capitalised arrears will be added to the amount you owe. This means that the amount you need to pay back at the end of the mortgage term will be higher and you will pay more interest.
If you can no longer afford to make your mortgage payments but want to stay in your property and are resident in Scotland or Wales, you may be eligible for one of their mortgage rescue schemes. These schemes allow you to keep living in your own home as a tenant, part-owner or part-tenant.
If you live in Scotland, you can access more information on the Home Owners’ Support fund at www.mygov.scot/home-owners-support-fund
If you live in Wales, you should contact your local council’s Housing Options team, homelessness team or housing strategy officers for information on whether there is a mortgage rescue scheme in your area which could help you.
If you are no longer able to afford to live in your home, we may be able to help you sell the property through our assisted voluntary sale scheme. You’ll be able to stay in your property while it’s on the market, you’ll stay in control of the sale process and we’ll even pay your sale costs.
Important information about assisted voluntary sale:
- Once accepted onto the scheme it lasts for six months. During this time, you’ll be expected to co-operate with us and the selling agent. If a sale isn’t achieved within this time, we reserve the right to extend or remove you from the scheme.
- We’ll pay estate agent and legal costs up to an agreed limit.
This is known as a sale at shortfall. If you wish to sell your property, regardless of whether there are any mortgage arrears, and the sale price won’t be enough to pay back your mortgage balance you will need to go through our sale at shortfall process.
Important information about selling at a shortfall:
- We’ll obtain an independent valuation to make sure that the sale price is the true market value of the property.
- You’ll remain responsible for paying back any shortfall amount (there are certain exceptions to this if you’ve been declared insolvent, you should check with your trustee or the Official Receiver).
- We’ll report the shortfall amount to credit reference agencies and this may affect your ability to borrow money in future.
If you no longer wish to remain in your home and have somewhere else to live, regardless of whether there are any mortgage arrears, you can choose to voluntarily surrender the property (often known as ‘handing the keys back’). You should think very carefully before going ahead with this option.
Important information about voluntary surrender:
- Ensure that you have somewhere else to live before handing back the keys.
- Voluntarily surrendering your property may affect your eligibility for housing support from your local authority.
- You should remove all your possessions and take final meter readings before handing back the keys.
- You should maintain appropriate buildings insurance until the property is sold.
- We’ll place the property on the market and attempt to obtain the best sale price.
- If the property sells for less than the outstanding mortgage balance, you’ll remain responsible for paying back any shortfall amount.