We will write to you prior to the payment holiday ending to outline the options for repaying the unpaid amounts over the remaining term of the mortgage. These options may include;
• Option 1 - Re-calculating your payments over the remaining term to ensure the interest that has accrued during the payment holiday is repaid, as interest, over the remaining term of your mortgage (for these purposes we call this ‘capitalisation’).
The interest you pay on the interest which has accrued during the payment holiday, will also be collected as part of your recalculated monthly payments. If you have a Capital Repayment mortgage the repayment of the outstanding balance you would have otherwise paid during the payment holiday will also be included in these payments.
• Option 2 - Making additional payments each month over an agreed period of time, to repay the interest which has accrued during the payment holiday in a shorter period. If you have a Capital Repayment mortgage you can also choose whether to make an additional payment to repay the outstanding balance that you would have otherwise paid during the payment holiday.
If you choose this option you should end up paying less interest than if you choose ‘capitalisation’ as the period over which you are paying interest on the interest which has accrued during the payment holiday is shorter.
You can setup the additional payments by completing this form: Increased Payments Form
Either of the above options will result in an increased monthly payment until such time as the full amount is repaid.
• Option 3 - Repaying the interest which has accrued during the payment holiday as a single lump sum payment. If you have a Capital Repayment mortgage you may also choose whether to make a lump sum payment to pay the amount of the outstanding balance that you would have otherwise paid during the payment holiday.
You will still pay more interest than if you had not taken a payment holiday but you will pay less interest than if you choose either of the other options, as you will not pay interest on the interest which accrued during the payment holiday after it is repaid as part of the single lump sum.
If you wish to make a lump sum payment either over the phone or your banking app please call to discuss on 01634 835044.
• Option 4 - Extending your mortgage term. In some circumstances we may be able to consider an extension to your mortgage term which will result in you paying more interest over the term of your mortgage, but only where your new instalment is not affordable to you.
To discuss an extension to your mortgage term, please call us on 01634 835044.
IMPORTNANT: If we don’t hear from you before payments recommence, we will assume that you will repay the unpaid amounts over the remaining term of your mortgage, and will therefore ‘capitalise’ the unpaid amounts on to your account, see above for more information on the implications of this.