A Reserve Mortgage is a secured overdraft facility on a Mortgage Current Account, where you borrow against the equity in your home. The Mortgage Current Account operates like a normal current account. You'll receive a chequebook, debit card and will also be able to set up standing orders and Direct Debits.
The amount of Mortgage Reserve that may be available for your use will be the difference between the outstanding balance on your Woolwich flexible mortgage at any particular point in time and up to a maximum loan-to-value of 90% on your property.
The loan-to-value on your property is the total amount outstanding on your mortgage loan at any particular point in time expressed as a percentage of the lower of the purchase price or our valuation of your property. For example, if the total mortgage loan is £80,000 and the lower of the purchase price or our valuation of your property is £100,000, the loan-to-value is 80%. In this instance, if 90% of the lower of the purchase price or our valuation of your property of £100,000 is £90,000, you could apply for a Mortgage Reserve of £10,000 (£90,000 less £80,000), or a lower amount if you wish.
The maximum limit we may offer you upon initial application is £20,000. Applications for a Mortgage Reserve are subject to status. A Mortgage Reserve is repayable on demand and must be repaid by the end of the mortgage term. A charge over your property is required as security.
For Woolwich flexible mortgages, interest is charged on a Mortgage Current Account at the Woolwich Standard Variable Rate except for Offset mortgages where interest is charged at the Offset mortgage rate. For Offset mortgages only, interest due on a Mortgage Current Account is charged to the Main Mortgage account (for interest calculation purposes).
All borrowing on a Mortgage Reserve is on an 'interest only' basis.
You can make payments to reduce the capital amount outstanding on your Mortgage Reserve at any time.