Important information for customers with an interest only mortgage ending between 20 March 2020 and 31 October 2021

We recognise that the impact of coronavirus may have affected your plans to repay your interest only mortgage, and that you might feel that now isn’t the right time to sell your property, or to carry out your previously agreed repayment plan.

In line with the latest guidance from the Financial Conduct Authority, it may be possible to extend your interest only mortgage for a further 12 months to give you more time to make an arrangement to repay your mortgage balance. Extending your mortgage in this way is called a ‘term extension’.

To be eligible: 

  • you need to hold an interest only mortgage with us, on a property you live in (not on a Buy to Let mortgage),
  • your mortgage term must end between 20 March 2020 and 31 October 2021, and 
  • you need to be up to date on your mortgage repayments (not in payment arrears). 

 Already have a payment plan in place?

If you already have a repayment plan in place, for example your property is on the market or already under offer, or your endowment or other policy pay-out is due or has already been received, you may decide it’s best to continue with your plan to repay your mortgage now, and not ask for a term extension.

It’s important that you consider all the options available before requesting a further one-year term, as you need to make an informed decision and be aware of the risks. For example, if property prices fall by the time your extended term ends you may get less for your property compared with selling it today, and this might affect your ability to sell and downsize to another suitable property in your local area. If you’re cashing-in investments, the value in a year’s time could be lower than the value today. 

If you ask us for a term extension you should carefully consider if it is right for you, and take independent financial advice if you’re not sure.

If your mortgage has already ended or is about to, please call us on 0800 917 5630 to find out more.

We’ll also be writing to customers about this, so you may wish to wait until you receive your letter and then call us to find out more.

If you’re affected by coronavirus and your interest only mortgage term finished, or is due to finish, between 20 March 2020 and 31 October 2021, Santander, in line with FCA guidance, can offer you a term extension for 12 months.

Taking a term extension means you’ll continue to make your monthly mortgage payments. 

As a result:

  • your interest only mortgage balance will stay the same, unless you’re making overpayments
  • the amount of interest you pay will increase, as you will pay a further 12 months of interest
  • if you’re looking to sell, the value of your property may have decreased at the end of the term extension period. 

There is no fee for taking a term extension and there will be no early repayment charge should you wish to repay early.
 
This is only available to customers who are currently up to date with their mortgage payments.

You will need to call us and we’ll be able to talk it through with you. 
For a Santander mortgage please call 0800 085 0980.
For an Alliance & Leicester mortgage please call 0800 085 1970. 

 Yes, if you take a term extension you’ll need to continue making your monthly payments to cover your interest. 

This means that the amount of interest you pay overall will have increased by the end of your mortgage.

If your mortgage interest rate moves onto either our Standard Variable Rate or our Follow On Rate at the end of your term, we’ll offer you a new 12 month mortgage term and a new interest rate. When we speak with you, we’ll explain how this might change your monthly repayments.

An indication of monthly payments is included below:

Illustration of the amount owed on an interest only mortgageIndicative interest rate (your actual rate may be different)Monthly repayment for a 12-month mortgage termTotal interest paid over a 12-month period
£30,0002.99%£74.75£897
£60,0002.99%£149.50£1,794
£100,0002.99%£249.17£2,990

If your mortgage has an interest rate that tracks the Bank of England base rate at a set figure, we’ll offer you a term extension for 12 months, but your interest rate and your mortgage contract terms and conditions will remain the same.

 If we’re changing your interest rate, we’ll send you terms and conditions to sign and return to us. They’ll confirm your new expiry date, interest rate and monthly payments.

Once we have received the signed copies, we’ll make the changes to your mortgage and confirm in writing once it has been completed.

If your interest rate isn’t changing, as you’re on a Bank of England tracker rate, we’ll send a letter to you confirming the 12-month extension.

This term extension is only available to customers who’re up-to-date with their payments. If you already have a payment arrangement agreed, please call us to discuss this. Should you clear any arrears on your mortgage within the term extension period which ends on 31 October 2021, we should be able to offer an extension to you.

We’ll be in contact with all customers impacted by this nearer to their maturity date to ask if they would like the term extension. Please could you wait for your letter and only get in touch once you have 3 months left on your term, to let us deal with customers who have already expired or are closer to maturity.

 

This term extension is only available to customers whose mortgage expired from 20 March 2020, however if you’d like to discuss what options are available to you, please call us on 0800 917 5630. 

This term extension is only available to our interest only mortgage customers, however if you would like to see if we can offer an extension on your mortgage as part of our standard policy, please call us on 0800 917 5630.

Yes, if you’ve taken a payment holiday you can still apply for this term extension. 

This term extension is only available to customers who have an interest only mortgage and are living in their mortgaged property. If you’d like to discuss a term extension on your buy to let mortgage, please call us on 0800 917 5630. 

We’ll be in touch again as you get closer to your new maturity date to discuss what options are available for you.   

When we speak to you to discuss your mortgage maturity, we’ll look at all available options.


 

No, this term extension won’t have any impact on your credit file.
 

Letters are automatically sent when an interest only term has ended. Please contact us so we can check your term extension is in place.
 

We’ll always confirm your term extension in writing to you within 7 days, so if you haven’t received it please contact us so we can check it for you.
For a Santander mortgage please call 0800 085 0980.
For an Alliance & Leicester mortgage please call 0800 085 1970. 

If the term extension is already in place you can repay your mortgage in the normal way without any early repayment charges.

If your term extension hasn’t been fully processed, please contact us so we can cancel the application for you.
For a Santander mortgage please call 0800 085 0980.
For an Alliance & Leicester mortgage please call 0800 085 1970.

Yes, you can make overpayments at any time in the 12-month extension period without any early repayment charges.

Yes, you can. However at the end of the 12-month period you’ll still need a solution to repay your mortgage. The earlier you find a repayment solution, the more options will be available to you, so we’d encourage you to continue with any permanent solution you have.  

Yes, you can. However at the end of the 12-month period you’ll still need a solution to repay your mortgage. The earlier you find a repayment solution, the more options will be available to you, so we’d encourage you to continue with any permanent solution you have. If you wish to cancel your lifetime application, you will need to do it directly with the lifetime provider.

Yes, you can. However at the end of the 12-month period you’ll still need a solution to repay your mortgage.

It’s important to note that house prices may fall as well as increase over time. If you’re considering selling your property during or at the end of the 12-month term extension period, you may receive less for your property than the value today.

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