Once you’ve decided on the type of mortgage you want, you’ll need to decide how to repay it. The main decision involves deciding between repayment (capital and interest) or interest only.
Whichever mortgage you choose, you’ll need to repay the capital (the amount you’ve borrowed) and pay interest – usually on a monthly basis.
How and when you repay the capital depends on whether you choose to arrange your mortgage on a capital and interest or an interest only basis. These options are explained in more detail below.
This arrangement involves paying back the interest and part of the capital on a monthly basis until the entire amount borrowed is eventually paid back over the mortgage term.
You have the reassurance that your mortgage will be repaid in full at the end of the term, as long as you make all your monthly payments.
You should take careful note of the fact that no life cover is included with this type of mortgage. We would strongly advise you to protect your family home by making sure you’ve enough life cover to pay off your mortgage in the event of your death.
With an interest only mortgage you will only make payments towards the interest on the capital you've borrowed, not the outstanding balance. This means that you will still owe the full amount borrowed on an interest only basis at the end of the mortgage term. You will need to make separate arrangements to repay this.
It is your responsibility to ensure that you have sufficient funds to repay the amount borrowed on an interest only basis at the end of the term. This could be an investment, such as an endowment, pension or ISA, or a combination of these. Whichever option you choose, you should review your plans regularly to make sure you are on track to pay off the mortgage on or before the end of the mortgage term and make changes if necessary.
The Society cannot advise you on the suitability of any particular repayment method. If you have any questions about whether an interest only mortgage is appropriate for your needs or if you have any questions regarding the suitability of a repayment plan, you should speak to an independent financial advisor.
No life cover or critical illness cover is included with this type of mortgage and we would strongly advise you to protect your family home by making sure you've enough life cover and critical illness cover to pay off your mortgage in the event of your death, or if you were unable to work due to accident or sickness.
If you choose to borrow all or part of the loan amount on interest only terms, a maximum of 50% loan to value applies. This means we will only lend you up to half the value of the property. If you intend to repay your mortgage in full at the end of the term through the sale of the property, then you must hold a minimum of £150,000 equity in the property at the point of application.
The products and services on this site are available to UK residents only. Applicants must be aged 18 or over and a full appraisal of your financial commitments will be made. Mortgages are subject to eligibility, status and financial standing. Mortgages that are for Buy to Let properties are regulated by the Consumer Credit Act 1974 and not by the Financial Services Authority.
Leeds Building Society is covered by the Financial Ombudsman Service. We may monitor and/or record your telephone conversations with the Society to ensure consistent service levels (including staff training).
The Society's main business is the provision of savings products, mortgages and general insurance.
Leeds Building Society is authorised and regulated by the Financial Services Authority and our registration number is 164992. You can check this on the FSA Register by visiting the FSA website at www.fsa.gov.uk or by contacting the FSA on 0845 606 1234. Mortgages which are for Buy to Let properties are regulated under the Consumer Credit Act 1974 and not by the Financial Services Authority.
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