Repaying my mortgage - FAQs

Frequently asked questions about mortgage repayments.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

With a mortgage you have to repay everything you owe and, until it's repaid, pay interest on the amount outstanding.

You can repay your mortgage over a term that suits you - from 1 to 40 years. When considering how long you want your mortgage to run, you should bear in mind how your income may change in the future as well as thinking about how you are planning to repay your mortgage. We will usually only consider lending to customers whose mortgage term ends before they reach 75.

If your mortgage carries an early repayment charge, you will be unable to choose a term that finishes before the early repayment charge period.

You can repay the amount you borrow:

  • gradually ('repayment' mortgage)
  • as a lump sum at the end ('interest-only' mortgage)
  • or, mix the two options

When you have a repayment mortgage, the monthly payment you make gradually pays off both the amount you owe as well as the interest on it. The longer your term, the lower your monthly payments will be, but you will pay more interest overall.

If all of your mortgage is on a repayment basis, the most you can apply to borrow is 95% of the property's value (or the purchase price if lower) – subject to lending and product criteria at the time of application. This is unless you are buying a new-build property or you're switching your mortgage to us from another lender and borrowing more at the same time, in which case the most you can borrow is 85%.

With an interest-only mortgage, your monthly payments only pay the interest on the amount you've borrowed - you won't actually be reducing the loan itself. This means that at the end of the mortgage term you'll still owe the full amount of the loan.

With an interest-only mortgage you'll need to make sure you've put plans in place to pay off everything you owe at the end of your term, for example an investment or savings plan. You'll also need to take the cost of doing this into account when comparing the costs of interest-only and repayment mortgages.

Mortgage interest information

An interest-only mortgage is a higher risk than a repayment mortgage. In most cases, there's no guarantee you will be in a position to fully repay the loan amount you owe at the end of the term. That's why you need to keep an eye on your investment or savings plan throughout the life of the mortgage to make sure it's growing accordingly.

It's your responsibility to make sure you have a plan in place that helps you repay the balance. You need to make sure you'll have enough money at the end of your mortgage term to repay your loan, because if you don't, you could lose your home.

Important Notes:

We do not provide advice on repayment plan(s) or make any guarantees that your plan(s) will be sufficient to repay the outstanding balance (loan) at the end of the mortgage term.

You should review your plan(s) regularly during the term of your mortgage to make sure it is on track to repay the outstanding balance.

From time to time we will ask you to provide evidence of your repayment plan(s) and this includes when you request additional services such as a Further Advance.

If you are unable to demonstrate that your repayment plan(s) remain(s) on track to repay the outstanding balance on your mortgage, we will not be able to proceed with an application until you have produced evidence to us that you have a suitable repayment method in place for both your new and existing borrowing.

Please remember it is your responsibility to ensure you have sufficient funds to repay your outstanding balance at the end of the mortgage term. If you are unable to do so, your home may need to be sold to repay the mortgage.
 

How can I repay my interest-only mortgage?

When you request a new mortgage or additional borrowing on an interest-only basis you'll need to provide us with evidence of your repayment plan(s). These will need to be from the accepted list. We'll check to see whether the repayment plan(s) meets our requirements and whether there is a reasonable prospect of it repaying the amount you plan to borrow on an interest-only basis.

When your further advance is added to your existing loan, the total amount owed must not exceed 75% of the valuation of your property or you will have to take the further advance on a repayment basis.

If any of your existing debt is on an interest-only basis and you require additional borrowing you will need to provide us with evidence of your repayment plan(s) from the table below. We will make an assessment of whether the repayment plan(s) meets our requirements. This includes checking to see whether it is likely to repay the amount you borrow on an interest-only basis. This is necessary even if your additional borrowing is to be managed on a repayment basis, where some or all of your existing debt is conducted on an interest only basis.

If you request to change your existing mortgage to an interest-only basis or to increase the proportion of interest-only lending you'll have to provide evidence of a suitable repayment plan(s). If part of your mortgage is already on an interest-only basis, you'll be required to provide evidence of the repayment plan(s) intended to repay this part of the debt, before any further interest-only lending can take place. The repayment plan(s) you intend to use for interest-only lending must be from our list of accepted repayment plans, see below.

Only when our assessment has been met will we be able to complete the transaction.

Repayment plans

Below are the accepted list of repayment plans for new interest-only lending and the assessment method we'll use. As with any investment, there is a risk and we strongly recommend you take independent financial advice.

Please note: Repayment plans cannot be accepted if they include the name of anyone not named on the mortgage.

Repayment plan

Evidence required

Assessment method

Endowment (UK) Both with profits and unitised plans.

Copy of latest projection statement dated within last 12 months.

Endowment companies will present three growth rates to a client with the middle one being the most likely projected outcome. We allow up to 100% of projected amount using the middle % figure currently 6%.

Stocks and Shares ISA (UK)
Unit trusts/Open enabled Investment Companies (UK)
Investment Bonds (UK)

Copy of latest statement dates within last 12 months

We will compare the value of the ISA/OEIC/Investment Bond with the amount of interest only lending required, taking into account the remaining term of the mortgage and future market volatility.
We will take up to 80% of the current value of the investment into account and the current value must be greater than £50,000. *

Stocks and Shares (UK)

Copy of share certificates, nominee account statement or confirmation from a recognised stock brocker containing evidence of share holdings together with their valuation.
Copy of latest statement dated within last 12 months.

See Stock and Shares ISA.

Pension (UK)

Copy of latest statement dates within last 12 months.

For the purpose of backing an interest only mortgage, a maximum of 25% of the current fund value with the current value to be greater than £1 million * .
Where customers are on a final salary pension scheme the lump sum can be used if it is greater than £250,000. Pensions can be combined to reach the £250,000 and there is no need for confirmation of the full fund value.

Sale of Second Home (UK)

Property details, confirmation of ownership, evidence of amount of any mortgage debt.

We will check the ownership of the other residential property and assess it's value. We will compare the equity avaliable in the property with the amount of interest only lending required.
We will take up to 80% of the current equity value but the equity avaliable must be greater than £50,000 at point of application. *

Sales of other Residential property (not yet purchased) (UK)

Property details, Acting solicitor to confirm intended ownership of the second property, details of any loans to be secured against this property. (Property valuaation and land registry search carried out by us if needed).

We will confirm the intended ownership of the second property prior to offer of the new mortgage/further advance. Current equity within the property must be over £50,000. We will use 80% of the current equity value of the property to support Interest Only lending. Please note that there is a minimum greater than £50,000 equity requirement for each individual property being used to support Interest Only lending * .
These interest rates are correct as at 02/10/2012. Interest rates are variable.
* If you have an interest only mortgage and are applying for a Further Advance the minimum repayment vehicle values do not apply.

As with any investment there is a risk that your investment will be insufficient to repay your outstanding mortgage at the end of the term and could mean your property needs to be sold to repay the mortgage. We will not provide advice on your investment plan and strongly recommend that you take independent advice.

When you make your final repayment you might have to pay an early repayment charge.

Find out more information about early repayment charges

The usual and easiest way of making your payments is by Direct Debit, and you'll be able to choose the mortgage payment date to suit you.

A Direct Debit is similar to a standing order in that payments happen automatically every month, but it is much more flexible. For example, you don't have to fill in a new form every time your payment changes and, if you have more than one mortgage loan, the payments for them can be collected as one single amount.

If you are taking out a new mortgage, you will need to pay your monthly payments by Direct Debit.

If you already have a mortgage and are borrowing more:

  • you don't have to do anything if you already pay by Direct Debit. Payments for the new amount will be collected automatically under the existing arrangement they have with you

This guarantee is offered by all banks and building societies that accept Instructions to pay Direct Debits.

If there are any changes to the amount, date or frequency of your Direct Debit, TSB will notify you four working days in advance of your account being debited or as otherwise agreed. If you request TSB to collect a payment, confirmation of the amount and date will be given to you at the time of the request.

If an error is made in the payment of your Direct Debit by TSB or your bank or building society you are entitled to a full and immediate refund of the amount paid from your bank or building society.

If you receive a refund you are not entitled to, you must pay it back when TSB asks you to.

You can cancel a Direct Debit at any time by simply contacting your bank or building society. Written confirmation may be required. Please also notify us.
 

Mortgage calculator

Get an indication of how much your mortgage repayments will be.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.