Interest Only | Chelsea Building Society
What is an Interest Only mortgage?
Your mortgage, or part of your mortgage, is on an interest only basis. This means that your monthly mortgage payments only cover the interest you owe. The money you borrowed needs to be repaid separately at the end of the mortgage term.
As a responsible lender, we want to make sure you can repay your mortgage.
Ways to pay your Interest Only mortgage
If you currently have mortgage with us but you're either looking for a new deal or wanting to transfer your mortgage to a new property you do have the option to continue on an Interest Only repayment basis as long as you have a suitable repayment strategy in place.
It's important to be aware that making your monthly mortgage payments and having a suitable repayment strategy in place does now guarantee that you'll have enough funds to fully repay the mortgage at the end of your term.
Suitable repayment strategies:
Existing Endowment- The endowment policy must be in the names of the borrowers
- The medium rated projection must be sufficient to cover the interest only amount of the loan
- The maximum Loan to Value (LTV) for the Interest Only part of your loan must not exceed 75%.
If you would like to talk to one of our advisers please call us on free phone 0800 138 1009. Alternatively you can request a call back by using the online form below. We will aim to call you back within 2 working days.
General Investments
The current value of your investments must be enough to cover the interest only amount of the loan at the time you make your application. Investments must be UK based and quoted in Sterling. Suitable investments can include:
- Stocks and shares (including S&S ISAs)
- Unit trusts
- Open ended investment companies
- Investment bonds.
The maximum Loan to Value (LTV) for the Interest Only part of your loan must not exceed 75%.
Pension Lump Sum
- The pension policy must be in the names of the borrowers
- Private and occupational schemes are acceptable
- 25% of the expected maturity value at retirement (using medium rate projection) must be enough to cover the Interest Only amount of the loan
- The borrowers must be over 55 years at the end of the mortgage term, as this is the earliest a cash lump sum can be taken from a pension
- The maximum Loan to Value (LTV) for the Interest Only part of your loan must not exceed 75%.
Sell and downsize
If you wish to pay off your mortgage by selling your home:
- The property value must be at least £250,000 at time of purchase
- The maximum Loan to Value (LTV) must be 50% of the entire loan.
Overpayments
If you wish to pay off your mortgage by making overpayments, the proposed overpayments must be enough to repay the capital amount by the end of the term. We'll assess your affordability to make overpayments and help you to calculate how much you'll need to overpay each year.
The maximum Loan to Value (LTV) for the Interest Only part of your loan must not exceed 75%.