My interest-only mortgage ends soon, what are my options?

Updated 29th September 2020

What happens when my interest only mortgage ends?

If you’re locked into an interest-only mortgage which will soon come to an end, you should have been advised when you signed up for the deal that you are responsible for paying off the original loan. Interest-only mortgages can be a really affordable solution for many people. However, saving to pay off the original loan throughout the mortgage term is important for all borrowers.

What you can do if your interest-only mortgage is coming to an end and you don’t have enough capital?

Hopefully, you will already have accrued some savings towards repaying the capital sum due when your mortgage comes to an end. If you do recognise that you won’t be able to repay all the capital originally borrowed when your interest only mortgage comes to an end, available solutions include:

Releasing the equity in your home by downsizing

If you took out an interest only mortgage some years back, it’s likely you own considerable equity in your home. Selling the property and downsizing to a smaller home could help you become mortgage-free, and also pay off the debt due to your existing mortgage provider.

Re-mortgage your home

It might be possible to switch your existing interest-only mortgage over to a repayment mortgage, but this will mean your mortgage payments increase. However, the positive side to this will be that your mortgage will be fully paid off by the end of term. You may be able to switch to a repayment mortgage with your existing lender, but this will depend on the available equity in your home, and the affordability of any new repayment mortgage.

Alternatively, taking out a new mortgage with a different lender can open up lots of opportunities, for example, some lenders can offer mortgages up to six times income. The amount you can borrow for a new mortgage will depend on your earnings and current circumstances. Using an independent mortgage broker can be the best way forward ensuring that all avenues are explored.

A new mortgage may be available to you on either repayment, interest-only or a mixture of both (part and part).

Equity release

Depending on your current age and available equity in your property, Equity Release may be an option available to you. This may be an option to explore if your income has reduced or ceased, or if your pension income is not sufficient to support residential mortgage affordability.

Speak to an interest only mortgage advisor.

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

The expert brokers we work with have experience in dealing with all aspects of interest only mortgages. They will also importantly use the whole of the market to access the very best deals available.

To obtain the latest copy of your credit report click here.

To find out how we can help call us on 0300 124 5655 or complete our quick enquiry form to speak to a mortgage expert.


Contact Mortgage Experts Online today!

Contact Us

Contact Us