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Service charge loans

More information about our mortgages

Mortgages we offer

We only offer our own mortgages. The mortgages we offer are very limited. Which loan (if any) we offer you will depend on your circumstances.

Resident Repayment Discretionary loans: +2.5% above the Bank of England base rate. 

Non-resident repayment Discretionary loans: +4% above the Bank of England base rate. 

'Voluntary' Lifetime Discretionary loans for exceptional hardship: +2.0% about the Bank of England base rate. 

Help we’ll provide

You should think carefully before taking out a loan. If you decide you need a loan, you should:

  • try to get it from a bank or building society first - they may be able to offer better rates and different products.
  • consider taking out mortgage payment protection insurance to cover payments if you can’t pay
  • get advice about these matters before proceeding - we do not offer advice

If you decide to apply for one of our loans we’ll provide:

  • several different financial illustrations based on the amount you’re borrowing
  • a European Standardised Information Sheet (ESIS), which gives a more detailed explanation of your preferred choice

If this isn’t the option you’d like to proceed with, we’ll provide an ESIS for one of the other options. You’ll need to make your own choice about if or how to proceed.

Fees you'll have to pay

If your application is successful and we make you a conditional offer which you accept, you’ll need to pay an application fee for the administration and legal costs. You might be able to roll this into your loan.

For any more loans you get with us, you’ll still need to pay a fee.

Once the conditional mortgage offer is accepted, the administration and legal fee will be payable, even if the application is cancelled or you change your mind about the loan.

You’ll have to pay a redemption fee on final settlement of the loan and all additional advances. The cost of the fee will increase over time.

Interest

We’ll charge interest on the amount you borrow. The service charge loan interest is variable and tracks the Bank of England Base Rate. Depending which loan product you have, will determine the % we add on to the Bank of England’s rate. 

When the Bank of England change their rates (up or down), we’ll write to inform you what your new interest rate is and, if applicable, what your new monthly repayment. You’ll need to adjust any standing order you may have to change the payment amount. We can't do this for you. 

We charge ‘simple’ interest and it’s calculated annually, applied monthly, but applicable daily. The annual point of calculation is called the ‘rest’ and is the date on the legal charge (loan contract). 

If you have a monthly repayment loan, the repayments will consist of both interest and capital. However, overpayments will not reduce the amount of interest, unless we have agreed to capitalise any payments. 

If you have a 'Voluntary' Lifetime Discretionary loan for exceptional hardship, the interest will always be calculated on the original principle, unless we have agreed to capitalise any payments. 

Read more information about overpayments

Refund of fees

The administration and legal fee isn’t refundable once you’ve signed the conditional mortgage offer, even if the application is cancelled. We won’t proceed until you’ve signed and returned the conditional mortgage offer.

The mortgage isn’t portable

We won’t allow the mortgage to be transferred to another property for any reason. We’ll insist your loan is paid back before releasing the charge against your property.

Postponing our charge

We look at each request on an individual case by case basis. However, we hold the right to decline your postponement request and insist your loan is paid back before releasing the charge against your property.

Early repayment or overpayment charges

There are no limits or penalties to paying your loan back early.

Overpayments

Overpayment towards your loan will not be refunded, unless the loan has been redeemed. 

Overpayments may not bring down your monthly payments. Overpayments won’t be put towards the capital unless you write to us asking us to ‘capitalise’ your overpayments. Capatilising is solely at our discretion.  We won’t consider capitalising payments under £100. 

Once a payment has been capitalised, it can’t be reversed and, if you fall into arrears later, the capitalised payment won’t offset the arrears.

Arrears

If you’re in arrears and are struggling to keep up with your repayments you should contact us immediately. We’re keen to help and can talk you through your options. The Money Helper has useful information and can offer advice.

Southwark Council can charge a reasonable arrears charge for loan accounts that fall £61.50 or more in arrears in two consecutive months or twice in a 12 month period to cover administration costs. This fee will be reviewed annually in the Policy and Resources Strategy report (fees and charges appendix). Your home may also be at risk so please do not ignore the problem.

You'll receive arrears letters if your payments have not kept up to date with your repayment schedule. 

This might be for the one of these reasons: 

  • You didn't make a payment(s). You will need to make a payment for the amount you are in arrears to bring your account up to date. 

  • A payment you made is missing. If you believe a payment is missing which you've paid, please contact us with the details and supply evidence of the payment e.g. bank statement 

  • Your payment(s) don't match the monthly repayment schedule and are not enough. Our loans are variable, tracker loans, meaning the repayment amounts will change when the Bank of England interest rates change. We send you letters when this happens with the new monthly repayment amount. If you are paying by standing order, you’ll need to change the amount yourself. We don't have a Direct Debit payment option so we can't change the monthly amount for you. If you'd like to know your current monthly repayment amount, please contact us.

Annual statements 

Every year we’ll send you a statement showing the interest applied to your account and any payments you’ve made. This is not a demand for payment, but is a useful record for your financial and tax management.

Loan account 

Your loan account is separate from your service charge account. 

We remove the debt from your service charge account and place it into a new separate account (the loan account). The money is still owed, however the loan debt is now in its own dedicated account. 

It's important when making payments towards each account that you're using the right details, otherwise payments won't reach their intended account.

If you have a complaint

Please contact the Homeownership Manager:

Email: Hsg.homeownership@southwark.gov.uk

Telephone: 0207 525 5000

Read more about our complaints process

Page last updated: 13 March 2024

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