For the first five 5 years:
- the equity loan is interest free
- you pay a £1 monthly management fee by Direct Debit
From year 6:
- pay the £1 monthly management fee
- pay monthly interest fee of 1.75% of the equity loan
- interest rate will rise each year in April by the Consumer Price Index (CPI), plus 2%
- continue to pay interest until you repay your loan in full
When you take out your equity loan, you agree to repay it in full, plus interest and management fees.
You must repay your equity loan in full:
- at the end of the equity loan term
- when you pay off your repayment mortgage
- when you sell your home
- if you do not follow the terms set out in the equity loan contract and we ask you to repay the loan in full
The amount you pay back is worked out as a percentage of the market value at the time you choose to repay.
If the market value of your home rises, so does the amount you owe on your equity loan. And if the value of your home falls, the amount you owe on your equity loan falls too.