If your mortgage, or part of your mortgage with Yorkshire Building Society, is an interest only mortgage, then your monthly mortgage payments only cover the interest you owe. The money you borrowed (the capital) still needs to be repaid separately at the end of the mortgage term.
As a responsible lender who puts customers at our heart, we want to help you make sure you can repay your mortgage, so we have been contacting all our customers to find out what their strategies for repayment are. Our work is also consistent with guidance from the Financial Conduct Authority (or FCA - who regulate mortgages) who have told mortgage lenders that it’s good practice for us to contact customers regularly to make sure they know what their options are.
Please provide us with details of how you intend to repay your mortgage. You can do this by calling us on the number below or you can complete our online form. We’ll need to take details for each of the account holders named on the mortgage as well as the details of any repayment strategies that you have in place.
If you would like to talk to one of our advisers please call us on free phone 0800 138 1009. We are available from 8am to 8pm Monday to Friday and from 9am to 1pm on Saturdays. Alternatively you can request a call back by using the online form below. (Please note, we will endeavour to call you back within 2 working days).
Acceptable repayment strategies for existing customers are as follows:
|Repayment Strategy||Policy Rules|
|Existing Endowment||Policy must be in the names of the borrowers. Medium rated projection must be sufficient to cover the interest only amount of the loan. The maximum LTV for the Interest Only part of your loan must not exceed 75%.|
|General Investments||Current value of investments must be sufficient to cover the interest only amount of the loan at the time of application. Investments must be UK based quoted in Sterling. Can include: Stocks and Shares (including S&S ISAs), Unit Trusts/Open ended Investment Companies and Investment bonds. Cash ISAs premium bonds and general savings accounts are not acceptable. The maximum LTV for the Interest Only part of your loan must not exceed 75%.|
|Pension Lump Sum||Policy must be in the names of the borrowers. Private and occupational schemes acceptable. 25% of the expected maturity value at retirement (using the medium rated projection) must be sufficient to cover the Interest Only amount of the loan. Borrowers’ age must be over 55 years at the mortgage term end (as this is the earliest a cash lump sum can be taken from a pension). The maximum LTV for the Interest Only part of your loan must not exceed 75%.|
|Sell main residence and downsize||Minimum property value of £250,000. Maximum LTV 50% (whole loan, not just Interest Only amount)|
The level of proposed overpayments must be sufficient to repay the capital amount of the loan by the end of the term using the following calculation:
The required overpayment amount per year = Your Interest Only loan amount divided by term (months) multiplied by 12.
Please note, as affordability is assessed on a Capital & Interest basis, all borrowers will be able to afford to pay the overpayments and they do not need to be included in the affordability assessment as an additional outgoing/expenditure. Where overpayments are not realistic to repay the Interest Only part this is not classed as an acceptable repayment strategy.
The maximum LTV for the Interest Only part of your loan must not exceed 75%.
Any criteria not included in the list above will be considered on a case by case basis.
Speak to one of our friendly mortgage advisors about your options