For many homeowners, the thought of their interest-only mortgage ending can be daunting. After years of monthly payments, the outstanding mortgage balance remains, and the question of how to repay it suddenly becomes very real.
For some, downsizing has always been the plan. Selling up, moving somewhere smaller, and freeing up some money might have seemed perfectly sensible a few years ago. But when the time comes, reality can look rather different. Perhaps you love your home, have family nearby, or simply cannot imagine leaving somewhere you’ve spent years making your own.
The good news is that moving isn’t necessarily your only option. If your interest-only mortgage is approaching its end date and you don’t have enough savings or investments to repay the balance, you may be able to restructure your borrowing or arrange a new mortgage, depending on your age, income, property value, and outstanding mortgage. For homeowners aged 55 and over, a Lifetime Mortgage may also be worth considering.
A Lifetime Mortgage is a type of equity release that allows eligible homeowners to borrow against the value of their property without making regular monthly repayments, although interest is usually added to the loan over time. The loan, plus any accumulated interest, is generally repaid when the property is sold, usually following a move into long-term care or death.
In the right situation, it could help you repay an existing interest-only mortgage and stay in the home you love. However, you should understand the long-term costs and implications, including how it affects the equity left in your property and any inheritance you hope to leave.
Of course, every situation is different, and the amount available will depend on factors such as age, property value, the lender’s criteria and affordability where relevant. The right approach depends on your individual circumstances, and not every option suits everyone.
If you’re worried about how you’ll repay your interest-only mortgage, don’t assume that selling your home is your only choice. Speaking to a specialist adviser early can help you understand what’s possible, weigh up the costs and make a decision that works for your future.
Get in touch to discuss your circumstances and find out what solutions may be available to you.
This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
