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My Interest Only Mortgage is Ending Soon – What Are My Options?

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The looming end of the interest only period can be a source of uncertainty for a lot of homeowners. Your lender will expect you to pay off the loan amount in a single lump sum at the end of your term.

If you do not have all the money available to do this, this article aims to provide guidance and reassurance that there are various options available.

By seeking great mortgage advice (from us), we can ensure a smooth transition into the next phase of your mortgage and/or retirement.

Option 1 – Remortgage to a Capital Repayment Mortgage

We’ll always investigate whether we are able to move your mortgage over to a regular repayment product. This will be a new mortgage, typically over 10 to 20 years and will repay both the capital you owe to your current lender and any interest.

Moving to a repayment mortgage will depend on several factors including, how much you owe, your property value, your age and income. Older borrowers aged 50+ may struggle here and other options maybe more suitable.

Option 2 – Selling Up or Downsize to a Smaller Property

If you have lots of equity you may wish to consider selling the property to move in with a family member or alternatively, downsize to a smaller property that you can buy in cash with the proceeds.

Once the property sale completes, you’ll be able to pay off your current interest only deal and be enjoy mortgage free.

Option 3 – A New Specialist Mortgage Designed for The Over 50’s

Due to the large number of interest only mortgage deals ending in recent years along with some positive regulation changes, mortgage lenders have been forced to be proactive with new products aimed to help older clients, aged 50+, remain in their homes.

These products are designed to help clients through to retirement and beyond and include:

Term Interest Only (TIO) Mortgages (age 50+)

A TIO is an exclusively designed interest only mortgage to help clients over the age of 50. This product allows our clients to get a new interest only mortgage deal with a term of 5 years or more to match their needs.

Retirement Interest Only (RIO) Mortgages (age 55+)

A RIO is a new type of interest-only mortgage aimed at clients over the age of 55. Like a regular mortgage, it is secured on your home, and you’ll pay interest payments every month.

Providing that all interest payments are met, the amount you borrow will not increase. Your new retirement interest only mortgage lender will repay your current interest-only mortgage.

Equity Release (age 55+)

An equity release mortgage works by allowing homeowners, aged 55 or over, to release tax-free money from their homes. If we recommend this option based on your personal situation, the money that you release from your home will be used to repay your current interest only mortgage in full.

There are two main types of equity release plan available. The first is a lifetime mortgage, where you maintain full ownership of your property, this is recommended here 99% of the time.

Secondly, there is a home reversion scheme, where you choose to sell but remain living in the property until death or you choose to go into long term care, this scheme is suitable for a very small number of clients with specific individual circumstances.

Have a Question?

It’s easy to send a question to one of our specialist mortgage advisors. Simply follow the link below and ask a question. We’ll be in touch right away!

Option 4 – A Combination of The Above

Often, the cheapest and most appropriate solution for our clients is not simply one product from the outset. Here we can look at the full range of mortgage options available to meet your lifestyle now and in both the short- and long-term future, taking you from age 50 to retirement and beyond.

We see a lot of clients that have received or are speaking to restricted and limited mortgage advisors who are not independent and do not have a full range of products available. An equity release plan should always be a last resort.

Getting Suitable Mortgage Advice

If you feel ready to take the next step with us to talk through your options, we’d love to hear from you. You can telephone or book online to arrange a free, no-obligation consultation where we can discuss your mortgage options. 

We’ll answer all your questions and recommend a way forward. We don’t need anything in the call other than your ages and your address.   It’s always a great idea to involve family members in these discussions also.

Evening calls are available to fit around any work or children’s commitments also. 

Interest Only Mortgage Ending Soon, Leave Yourself Enough Time!

As your term comes to an end, your current interest-only mortgage lender will write to you on a regular basis prompting the repayment of the capital. We recommend leaving approximately 6 to 12 months’ time before your products ends to get a new product arranged.

We look forward to speaking through your options soon, it’s a free, no-obligation consultation.


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Author Image of Dan Osman - Head of Later Life at UK Moneyman Ltd.

About the Author

Dan Osman

Head of Later Life at UK Moneyman Ltd.

Dan joined the Financial Services sector back in 2002, but actually left the industry in 2008 before returning some years later. During the in-between years, he took a degree to become a Social Worker specialising in working with vulnerable adults.

Upon his return, Dan combined his experiences in the two sectors to become an Equity Release Specialist and he now heads up UK Moneyman’s Later Life Lending proposition. He genuinely believes in a holistic approach and always ensures his clients receive a proper consideration of all the options available, including non-lending alternatives to Equity Release.

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Registered Address: 10 Consort Court, Hull, HU9 1PU.

Authorised and Regulated by the Financial Conduct Authority.

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