Where your mortgage is made up of sub-accounts, we look at each sub-account separately and change the monthly payment only on sub-accounts affected by the change. This may mean that some and not all sub-accounts get a monthly payment recalculation.
Mortgages on daily interest
- For repayment sub accounts - We work out what you owe on the day we recalculate your monthly payment. We add this to the amount of interest we expect will be charged to the end of that month. Then we take off the amount of any arrears that you owe, which you will need to pay separately.
- For Interest Only sub accounts - We work out what you owe on the day we recalculate your monthly payment. We add this to the amount of interest we expect will be charged to the end of that month.
- We work out how many months remain to the end of the mortgage term starting from the following month and then work out what your new payment should be.
- However, if we receive your monthly payment after we recalculate, it will mean the recalculated payment amount will be higher than it needs to be. If this happens and you would like us to recalculate your monthly payment, you can contact us.
Some customers with older mortgages have interest calculated on a monthly or annual basis. We recalculate the payments on these mortgages differently. If you think you are on monthly or annual interest and would like more information, or you would like to switch to daily interest, please contact us.
For interest-only mortgages, you pay only interest during the term of your mortgage and pay a lump sum at the end of the term to pay off everything else you owe. To calculate your monthly payment, we take the amount you owe on the day we do the recalculation together with how much we think interest will be to the end of that month. We then calculate a monthly payment at a level that pays the interest-only on this amount taking into account any interest rate change.
Where part of your mortgage is repayment and part interest only, each method will apply to the part concerned.
