Paying Off Your
Mortgage Each Month
It is important to consider how you’ll pay off your mortgage in full at the end of your mortgage term. What you need to do will depend on the type of mortgage that you currently have:
If you have a Repayment mortgage, then as long as you stay on track with your monthly payments, your mortgage will be completely paid off at the end of your term and you will then own your property outright.
If you think you may start to struggle to make a payment, please contact us so we can try to help.
Interest Only mortgage
If you have an Interest Only mortgage, your monthly payments only cover the interest on the balance owed. Your payments are not reducing the loan balance you originally borrowed and you will need to pay the balance in full at the end of the term.
There are various ways you can prepare to pay back your original loan and minimise any shortfall, but you do need to have some kind of plan in place. If you do not have one, it's never too late to get started.
Here are some of the ways you can pay off an Interest Only mortgage:
Using Savings or Investments
It is important that you review your savings/investments (such as an endowment policy or pension) at least once a year to make sure they’re on track. Otherwise, you could reach the end of your mortgage term and find yourself with less than you need.
Your savings/investment statements should highlight any shortfall in the amount you’re expecting. If this is the case, call us and we will talk you through your options.
Selling Your Property
If you plan to pay off your original loan by selling your home, you need to ensure all the sums add up. Timing can be crucial - so make sure you know when the right time is to sell. You must consider the effect any drop in the value of your property might have on the sale price you can achieve. House prices won’t necessarily rise during the remainder of your mortgage term and you could be forced to sell during a dip in the market. If you sell for less than you planned, you could be left with a shortfall on the amount you owe.
It could also take longer to sell your property than you anticipated so you need to keep an eye on the housing market in your area.
If you are planning to sell, talk to us about your plans. We can help make sure you’re fully prepared to get the most from your sale
Remortgage with another lender
Mortgage lenders apply strict criteria for new mortgages. You may need to provide a larger deposit, or have a high level of equity relative to the amount you wish to borrow. This could mean that your remortgage options in the future are more limited and those deals that do exist may be more expensive than you expect. Speak to an independent mortgage advisor to discuss your options. Visit our Remortgaging page for more information.
Switch to a Repayment mortgage
You can opt to pay off your balance gradually, over the full term of your mortgage, rather than in a single payment at the end by switching to a Repayment mortgage.
With a Repayment mortgage, as long as you stay on track with your monthly payments your mortgage will be completely paid-off at the end of the term, so you will eventually own your property outright.
If a full switch to a Repayment mortgage costs too much, then you may consider changing just part of your mortgage to Repayment, whilst keeping the remainder as interest only. This is called a Part & Part mortgage.
Call us to find out more.
Switch part of your mortgage to Repayment
The increase in your monthly payments will be less than with a full switch to repayment, so this option could be more affordable. If your income allows, you can also increase the portion of your mortgage on repayment in the future and 'step up' your monthly payments to increase the amount of your loan that you will gradually be paying off.
With a Part & Part mortgage, whilst you will not pay off your entire loan over the term of your mortgage, you will reduce the balance you owe. This could help if you are facing a shortfall from an investment plan, or if you eventually sell your property in the future for less than you expect. Alternatively, if you are thinking of remortgaging to another lender, reducing your balance could be beneficial as this might help you increase the equity in your property and potentially give you more remortgage options.
Please contact us to discuss how Part & Part may work for you. We can then provide you with details of how much extra you would have to pay each month.
Every overpayment reduces your mortgage balance and therefore the interest you are charged over the term of your mortgage. Even small overpayments can add up and make a big difference to the total amount of interest that you will pay - and the balance left to repay at term-end.
If you can't afford to make regular monthly overpayments, you can always just do this as and when you want to, using money from an annual bonus or other windfall for example.
Need a redemption statement?
Don’t forget you can now check your current balance or request a redemption statement without having to call or write to us by using our Self-Serve facility.
If your interest only mortgage term is coming to an end
When your mortgage term ends, you must pay off the whole balance outstanding on your account and any associated loans (if the associated loans have also came to an end). This requirement is part of the terms and conditions of your mortgage.
If you have an Interest Only mortgage, your monthly payments have been paying the interest but have not reduced your loan balance (unless you have been making overpayments to reduce the balance of your mortgage). This means that at the end of your agreed mortgage term, you need to repay your loan in full.
If you do not have a repayment plan in place to repay your loan in full, please contact us.
Your home may be repossessed if you do not pay the full amount on the date we agreed. We will only ever take possession action as a last resort, after all options have been explored. You may also be taken to court to recover any additional shortfall if the sale price of your property does not cover the loan.
If your mortgage term has already ended
Whatever type of mortgage you have, if your mortgage term has now ended, you should have repaid your loan balance in full in accordance with the terms and conditions of your mortgage.
If you have not repaid your loan balance in full, you should contact us. We can then discuss your circumstances and discuss any options that may be available to help you.
Failure to repay the remaining mortgage balance at the end of the term may lead to action being taken in respect of your property (such as taking possession). We will only ever take possession action as a last resort, after all options have been explored.
If we accept any payments from you after the mortgage term has ended this payment will be put toward the outstanding mortgage debt including interest due. This does not affect any of our rights under the mortgage terms and conditions. Any delay in exercising our rights does not constitute a waiver of that right or remedy.
Part & Part mortgage
A Part & Part mortgage is made up of two repayment types, with a portion of the balance being subject to a Repayment Mortgage and the other portion being subject to an Interest Only mortgage. So you will reduce a portion of the balance you owe, but you will not pay off your entire loan over the term of your mortgage. However, you will reduce the balance you owe, which could help if you’re facing a shortfall from your savings or investment plan, or if you sell your property for less than you expect.
Tell us your plans
However you intend to repay your mortgage, it’s important that you get in touch to discuss this with us. There are lots of ways we can help you develop your plan and keep it on track, both now and right through to the time your mortgage ends.
If you’re unsure how you might repay your loan, contact us to let us know and we can guide you through the different options available.
You may want to pay off (i.e. redeem) your mortgage early, perhaps because you are looking to remortgage with another lender or sell your property. Or you may have a lump sum available and want to use it to pay off your mortgage. In this section you will find information to make the process of redeeming your mortgage as smooth as possible.
Redeem your mortgage
To pay off your mortgage early, contact us to request a redemption statement. This statement will tell you how much you currently owe on your mortgage including any fees payable. You may find it easier to request a redemption statement using our online Self-Serve facility, which is available 24 hours a day, 7 days a week.
How to pay off your balance
Cheques should be made payable to Rosolite Mortgages and your mortgage account number should be written on the reverse. Then simply send it to:
PO Box 121
If you're more comfortable using online banking, then the details you need to pay by online transfer can be found here.
If you have an Interest Only or Part & Part mortgage and are using a repayment vehicle such as an endowment or other investment, you need to know the value of the investment to ensure that its expected value will cover the amount owed on your mortgage. If the value of any repayment vehicle is insufficient to cover the amount you owe on your mortgage, then you are responsible for covering this 'shortfall' from other funds. This is also the case if you are selling your home and using the sale proceeds to pay off the mortgage.
Fees and other costs
You may have to pay a redemption fee, which covers the maintenance and general administration of your mortgage during its term. This fee is non-refundable and is added to the final amount that you owe us.
If you move your mortgage to another lender, please note that we are currently waiving all Early Repayment Charges. Please contact us for more details.
If your property is sold for an amount less than your mortgage balance, you will still be legally responsible for the full amount of the mortgage that is outstanding. You should contact us before you proceed with any sale if this is the case, so that we can discuss how we will manage any shortfall.
Don't forget you can now request a redemption statement, or start the overpayments process online, without having to call or write to us by using our Self-Serve facility.