If you’ve got an interest-only mortgage with Bank of Scotland, it’s important you have a plan in place to pay the lump sum when it ends. If you haven’t got a plan, or you’re worried you won’t have enough to repay it, let us know – we're here to help.
Why an interest-only mortgage is different
With repayment mortgages, you pay off the interest and some of the capital each month, by the end of the term paying off the mortgage in full.
With interest-only mortgages, you only pay off the interest on the amount you borrow. You then have to pay the full amount.
Let us know your repayment plan
If your interest-only mortgage is coming to an end, let us know – we are here to help – tell us what your plan is to repay it. This could be anything from an endowment plan to selling assets you own to repay it.
If you’re worried about it, tell us so we can help as soon as possible. There are various options available if you think you have a shortfall. The sooner you act, the sooner we can help you get back on track.
Get in touch
If you’ve had a letter from us about your plans to repay, or you’ve got any questions, get in touch – we’re here to help. The sooner you call, the sooner we can help.
Lines are open Monday 8am to 8pm, and Saturday 8am to 1pm.
An interest-only mortgage means you only pay interest - you then repay the lump sum you've borrowed at the end.
With a repayment mortgage, the payments include interest and the main loan and the whole amount is paid in full at the end of the term.
We know how important your home is to you – we want to make sure you have a repayment plan in place for your peace of mind.
So give us a call sooner rather than later to discuss your options.
I have a plan in place - but I think there will be a shortfall – what can I do?
Let us know – we are here to help.
We can run through your options – we don’t judge – if you are worried you won’t be able to pay your mortgage at the end of its term.
Our specialist team solely deals with interest only customers who can’t repay.
We’ll listen to you and walk you through the options available.
Before you call, make sure you have your income details, and what you owe. We’ll need to know how much you are repaying to creditors, and what is left to pay.
The value of an investment could rise or fall; therefore you may want to consult an independent financial advisor. A list of independent financial advisors can be found at www.unbiased.co.uk
If you’re planning to sell your property to repay, don’t forget the value of your house depends on house prices at the time of sale.
If you can’t sell for the expected amount, you could be unable to pay off your mortgage in full and may not have enough equity to buy another property.
You’ll need to put the property up for sale before the end of the mortgage so a sale can be agreed and completed by the end of the term.
Yes. You can either make a lump sum overpayment or set up regular overpayments, but first check your mortgage details to see if an Early Repayment Charge (ERC) applies.
You can make lump sum overpayments online, paying in branch or call us to make a debit card payment.
If you’d like to set up a regular overpayment via standing order please contact your bank to set this up or if you would like to set a up a direct debit to do this, please call us on 0345 603 1637 and we’ll set this up.
If you are able to pay your whole balance in one go, then please call us on 0345 603 1637 and ask for a redemption figure – this is the total needed to pay off the mortgage in full.
We’ll then tell you the full and final payment amount and tell you how you can pay it.
Your redemption figure will depend on the date you can repay, so please have the date ready when you call us.
Depending on your circumstances, you may be able to increase your monthly payments to reduce the capital owed, switch some or all of the capital owed to a repayment mortgage.
We may be able to offer an extension to make a repayment mortgage more affordable (this is based on your individual circumstances and your future plans/finances).
Please get in touch. We are here to help if you are worried and you want some friendly advice.
There’s no charge to change all or part of your interest-only mortgage to repayment.
If you’d like to change how you repay your mortgage, please give us a call on 0808 145 0382.
Get in touch as soon as possible. The earlier you call, the more options are available to you. We can talk to you and support you through your options.
If your mortgage expires and we don’t hear from you, you could face legal action and possibly repossession.
Where can I get independent advice about my interest-only mortgage?
You can get free advice from the Money Advice Service.
Let us know – we are here to help.
We can run through the options available to you – we don’t judge – if you are worried you won’t be able to pay your mortgage at the end of its term. Our team only deals with interest-only customers who can’t repay their mortgage. We’ll listen and talk about what we can do. We’ll need to discuss your finances, to make sure your existing mortgage works for you, and let you know what we can do to help.
We’ll talk about:
- Repayment mortgages – for example transferring all or part of the amount outstanding to a capital repayment type mortgage and for you to repay this over an agreed term.
- New term – to agree a new mortgage term and for you to use other investments, either new or existing to cover the outstanding mortgage balance.
- Interest Rate – If you are currently on a deal or on one of our Variable Rates and whether there are any better options available.
This is completely free and we’ll need to talk to you about your circumstances and your money.
To make things quicker, please have these details to hand:
- What you earn – we need a gross figure, this should include your salary, overtime, guaranteed bonus plus any other income such as a pension or state benefits.
- What you owe – details of monthly payments and balances outstanding to creditors e.g. credit card, personal loan, hire purchase.
- Self-employed? We need information from your last two years tax returns from HMRC and how much of the company you own.
- Joint mortgage? If the mortgage is a joint mortgage, we will need the same information for the joint account hold.
- Your pension – if you pay into a pension fund, we will need details of your anticipated retirement income – you can find this on your latest pension forecast statement.
Will my home be repossessed if I can’t repay my mortgage?
Repossession is always only a last resort – we want to work with you to help.
However, you may have to sell your home to repay your mortgage if you don't have an alternative repayment plan.
Get in touch on 0808 145 0382 – let us help you.
* The names shown below have been changed, but the case studies are an example of a real customer experience. Any options we may suggest will be based on your individual circumstances.
Mrs Ahmed’s situation
Mrs Ahmed, 62, had an interest-only mortgage. She owed £70,000 and didn’t know how she could pay the balance before the end of the term.
She had planned to retire at 65 and move to a bungalow which would be more practical in her later years. Her plans have now changed and she will retire when she is 70.
Her mortgage term was due to end in two years. She decided to call Bank of Scotland to get some advice.
How we helped Mrs Ahmed
Mrs Ahmed spoke to Adam in the interest-only team who listened to her situation. He could see how her situation had caused her concern.
Adam is a qualified mortgage advisor. Adam explained Mrs Ahmed’s options and what impact they would have on his credit file.
She could not afford to move to a full repayment mortgage. But she could increase her payments a little. This would mean she'd pay off 40 per cent of her mortgage balance over eight years. She could then sell the property and move somewhere more suitable in the future.
The Jones’ situation
25 years ago Graham and Molly Jones took out an interest-only mortgage.
They didn't miss any payments but hadn't taken much notice of the letters about their mortgage.
Then they received a letter to say the term of the mortgage had expired. They still owed £115,000 and could not recall what was agreed with the mortgage broker. They didn’t realise it was an interest-only mortgage.
The Joneses were both retired and worried they would lose their house. They decided to give Bank of Scotland a call.
How we helped the Joneses
Graham spoke to Jeff who listened to their story. He could see how their situation had caused them stress.
Jeff was a qualified mortgage advisor. Jess explained the Jones’ options and what impact they would have on their credit. They could not afford to increase their monthly payments.
Because of this, Jeff suggested that they seek third party advice.
They did this and found that a lifetime mortgage would suit them. This meant they were able to keep their house and live there for as long as the wanted.
Are you in a similar situation?
You might be finding it difficult to pay off your interest-only mortgage. This might be because of an endowment failing. Maybe you were planning to sell but your plans have changed. If you’d like help understanding your options, call us on 0808 145 0382.