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What is an Interest-Only mortgage?

our mortgages explained

With an Interest-Only mortgage, your monthly payment only covers the interest charged on your mortgage, so you're not actually reducing the balance itself.

Here are some important things to know about managing your Interest-Only mortgage.

Your home may be repossessed if you don't keep up repayments on your mortgage.

How an Interest-Only mortgage works

An Interest-Only mortgage requires that you only repay the interest during the term of the mortgage. So you won’t actually be paying down the mortgage balance, which remains at the same level throughout the mortgage term.

Your monthly payments will be lower than a repayment mortgage – and this can be advantageous for some people. You will however need to ensure that you have a repayment plan in place as you’ll need to repay the actual balance all at once at the end of the mortgage term.

If you have a repayment plan in place

If you already have a plan, it’s important to make sure that it’s on track to cover your mortgage balance.

If you have an endowment plan or other investments, you should check the annual statements to see if there are any projected shortfalls. That way, if there are any problems or if your repayment plan is underperforming, you’ll be able to act early to make up any difference.

If you don’t have a repayment plan in place or your repayment plan is facing a shortfall

You should have a repayment plan in place from when you take out your Interest-Only mortgage. If you do not have a repayment plan or if it is underperforming then please get in touch. The sooner you start preparing your repayment plan the better. The longer you wait, the fewer options you’ll have.

To discuss your options, call your mortgage broker, a Woolwich Mortgage Advisor or our help line on 0800 085 2301 (lines are open 8.30am to 5.30pm Monday to Friday and 9am to 1pm Saturday). Call charges.

If you received a letter from Barclays

We’re sending letters to all of our Interest-Only customers during the term of their mortgage to remind them how an Interest-Only mortgage works and to highlight the importance of having a repayment plan in place.

If you received one of these letters and are concerned about your ability to repay the balance at the end of the mortgage term, please contact us using the details included in the letter.

If you’re concerned about not being able to repay the full amount at the end of the mortgage term

There are a number of options available– depending on your own personal circumstances – and these may include:

  • Switch to a capital and interest (repayment) mortgage. This means you would start repaying the original loan you borrowed. You can switch some or all of your mortgage to a repayment mortgage, free of charge. You can check out the monthly repayments by using the mortgage calculator on the Money Advice Service website
  • If you have savings, these could be used to reduce the overall amount outstanding. Please note that some of our products have restrictions on when and how much you can overpay without incurring an Early Repayment Charge (ERC). For further details on whether an ERC will be payable, please refer to your Offer Letter which forms part of the terms and conditions of your mortgage. Alternatively, you may contact us on 0800 197 1081. Lines are open Monday - Friday 9am - 8pm and Saturday 9am - 2pm. Call charges.
  • You may want to consult an independent financial advisor to see if you can invest in a suitable repayment plan to cover the balance by the end of the mortgage term. Remember that the value of any investment could rise or fall.
  • Consider selling your property or downsizing to a lower value home.

If you’re concerned about your ability to repay, the most important thing is to get in touch as soon as possible; this may either be with us, with an independent financial adviser or with one of the free, impartial services such as the Money Advice Service (contact details below).

Find out more about your Interest-Only mortgage

Your annual mortgage statement will contain all relevant information about your Interest-Only mortgage. If you received an Interest-Only letter from Barclays, this will also include details of your account.

Alternatively, you may call us on 0800 197 1081. Lines are open Monday to Friday 8am-9pm, Saturday 9am-2pm and Sunday 10am – 4pm.

Contact Us

If you’d like to discuss your terms please contact your mortgage broker or a Woolwich Mortgage Advisor. Alternatively, you may wish to contact our specialist help line on 0800 085 2301 between 8.30am and 5.30pm Monday or Friday and 9.00am to 1.00pm on Saturday. Call charges.

If you are a Premier Banking customer, you can also contact your Premier Banking Manager.

Other help

Important information

1. Lines are open Monday to Friday 9am-8pm, Saturday 9am-8pm and Sunday 10am-4pm. To maintain a quality service, we may monitor or record phone calls. Call charges

2. Lines are open Monday to Friday 8.30am-5.30pm. To maintain a quality service, we may monitor or record phone calls. Call charges

Barclays Bank PLC. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number: 122702). Barclays Bank PLC subscribes to the Lending Code which is monitored and enforced by the Lending Standards Board. Further details can be found at Barclays Insurance Services Company Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register number: 312078).

Barclays Bank PLC. Registered in England. Registered no. 1026167. Barclays Insurance Services Company Limited. Registered in England. Registered no. 973765. Registered office for both: 1 Churchill Place, London E14 5HP. ‘The Woolwich’ and ‘Woolwich’ are trademarks and trading names of Barclays Bank PLC. Barclays Business is a trading name of Barclays Bank PLC.


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