We use three methods of calculating and charging interest. You may have a combination of different methods depending on the terms of your mortgage.
Daily Interest Scheme
Interest is charged to the mortgage account on the first of each month, based on the number of days in the coming month and the balance outstanding (including unpaid interest) on the last day of the previous month. Interest is also charged (as mentioned below) on debits (sums added) to your mortgage account during the month. When you make your regular monthly payment, or any additional amount is paid into your account, we will adjust the interest charged based on the payment amount and the number of days remaining in the month (including the day on which the payment is credited). For example if your payment is received on 20 January, 12 days' interest credit will be given.
Annual Interest Scheme
Interest is charged to the mortgage account on 1 January each year based on the amount you owed (including unpaid interest) on the 31 December of the previous year. Interest is also charged, as mentioned below, on debits (sums added) to your mortgage account during the year.
We will not adjust the interest charged to reflect any payments into the account during the year, except for any additional payment(s) treated as a capital repayment (please see 'Can I pay extra towards my mortgage' for details).
Half-Yearly Interest Scheme
Interest is charged to the mortgage account on 1 January and 1 July based on the amount you owed on 31 December and 30 June respectively, with interest on debits in the period as mentioned below.
Interest charged on debits (sums added) to your mortgage account
All advances, including a new mortgage advance, additional borrowing, stage advances or retention releases will incur interest from the day they are debited to the account. For more information on when fees added to your loan will incur interest, download our fees and charges.
If there is a change to the interest rate on your mortgage we will recalculate the interest charged at the time the interest rate changes, regardless of the interest scheme which applies to your mortgage.
Please note that on redemption (full repayment) of your mortgage, interest will be charged to the date of repayment. Special arrangements apply to interest-only flexible drawdown mortgages and lifetime mortgages. If you would like more information on these types of mortgages please call us.
Your mortgage balance could increase for a number of reasons:
If you've borrowed more from us in the past year, this money will appear on your statement.
Addition of fees
If you have opted to have a fee added to the account, you will be charged interest from the day it is added to your account.
Also, your initial mortgage payment may have been calculated on the amount borrowed, which may not have included the product fee. This means your mortgage payment may rise when the fee is added to the balance and your new payment is calculated, for example following an interest rate change.
If your December monthly payment reaches us after 31 December because of public holidays, it will be credited in January. If you want to avoid this situation, you can change the date your payment is collected by calling us on 0800 121 6263.
If you haven't paid your insurance premiums in full during the year, the amount owed is carried forward to the next year.
Missed payments and mortgage accounts in arrears
If you have missed any of your mortgage payments, in part or in full, the interest that has been charged is calculated on the total balance outstanding which includes these missed payments, and any fees that may have been charged to the account.
Interest is still added to the balance of your account during a payment holiday.
If your mortgage account is split into a number of different parts - we call these 'sub-accounts'.
If you've borrowed more money or split your borrowing across different mortgages in the past, your mortgage will have sub-accounts. Each one may have different terms and conditions.
Although you'll usually only make one payment each month, we'll divide the money you pay us between your mortgage accounts in the following order:
- Secured personal loan(s)
- Further advance(s)
- Main mortgage account
If you'd like more information about how we distribute your monthly payment, please call us on 0800 121 6263.
You must have adequate buildings insurance in place. This is a condition of your mortgage with us.
Your buildings insurance should be sufficient to cover you for the full cost of rebuilding your property in the event it is destroyed. This is called the reinstatement amount.
You can also choose to take out other insurance policies such as contents insurance, critical illness cover, life assurance and redundancy protection. However, these are not a requirement of your mortgage.
Call us on 0800 121 6263 to request a Certificate of Interest Paid (MIR600) for each part of your Consent to Let mortgage. This certificate will contain a summary of the interest you paid in the previous tax year.
If you have an agreed drawdown arrangement on your flexible drawdown mortgage and you'd like to withdraw additional funds, please call us on 0800 121 6263 and we'll provide you with a personalised illustration of the costs.
We will carry out a credit assessment that includes a review of your ability to repay your mortgage. This credit assessment won't be seen by any organisation carrying out a subsequent search, and it won't affect your credit rating.
We'd occasionally like to tell you about our new products or services. We will never pass on your details to third-parties for sales or marketing use without your consent, and we'll only contact you when we genuinely believe it may be of benefit to you.
However, if you'd like to opt out of receiving marketing information, please call us.
If you do choose to opt out we will of course continue to send you your account statements, statutory notices and other information relevant to the operation of your account as usual.
If something goes wrong, please contact our Customer Service Centre on 0800 121 8899, go to a branch or write to us at Economic House, PO Box 9, High Street, Coventry CV1 5QN. We can sort out most problems very quickly.
If you believe we have not dealt with your complaint satisfactorily, you can refer the matter to the Financial Ombudsman Service. For more information visit their website: www.financial-ombudsman.org.uk