When an interest-only mortgage ends, you have to repay all the amount you borrowed. You can’t just carry on paying the interest.
The money to repay it can come from three sources:
- savings or investments;
- by getting a new mortgage; or
- by selling your house.
Contents
How many interest-only mortgages are there?
FCA research found that at the end of 2022:
There are now fewer than 1 million regulated mortgages outstanding in the UK that are wholly or partly interest-only. The number has dropped rapidly in recent years, halving since 2015 when there were more than 2 million.
Three quarters of these mortgages are wholly interest-only – the rest are “part and part” where part of the mortgage is interest-only, and part is a repayment mortgage.
In 2023, switching to interest only for a short period is one possible option for people having difficulty making high repayments caused by mortgage rate increases. These temporary IO mortgages are not included in the above statistics.
Find out your options now – even if you are worried about this
If you will have difficulty repaying it when it finishes, you need to review your options and make some decisions as soon as possible.
This may be harder now mortgage rates are increasing. But the longer you leave it, the fewer choices you will have. If you are one of these people without a plan, you are risking having to sell your house or have it repossessed if you can’t repay the mortgage when it ends.
The FCA, which regulates mortgage lenders, has a leaflet explaining why you should act now and talk to your lender – even if you feel nothing can be done to help you. This may feel scary but:
- a lender can’t “cancel” your mortgage before the end date if you say you don’t have a plan to repay it;
- a lender can’t make you move onto a repayment mortgage that you can’t afford.
What probably won’t work…
“I want to carry on with the monthly payments after the end, I can afford them”
Your mortgage contract says you have to repay the full amount at the end. The FCA says:
Customers are responsible for the full repayment of the capital when the interest-only mortgage matures and we acknowledge that lenders aren’t obliged to offer options to those who are unable to repay at maturity.
So if you have an interest-only remortgage, you can’t rely on your lender coming up with any options for you at the end. Let alone a nice option such as allowing you to carry on making your current monthly mortgage payments.
“I want to get another interest-only mortgage at the end”
A lot of people are hoping for this. But times have changed and it is now very difficult to get a normal interest-only mortgage. Your current lender is very unlikely to offer you this as an option, however much equity you have.
People coming to the end of an interest-only mortgage will probably be well over 50, and many of them will be over 65. If you will be retiring during the new mortgage that you want, it is unlikely you will meet the mortgage affordability criteria unless you have very good pension arrangements.
Many people switched to an interest-only mortgage because they had a lot of other credit card and loan debt. Unless you have cleared your other unsecured debts they will make it harder to get a new mortgage.
“Was my mortgage mis-sold?”
Citizens Advice says “Some of the people who came to [us] said they were not made aware that they would need to repay the capital at the end of their term.” It is possible that in future the regulator or Financial Ombudsman may decide that some of these cases were “mis-sold”.
But this isn’t likely to apply to the majority of cases. Although an interest-only mortgage with no repayment plan is often a long-term disaster, it could have been a sensible option when you took out the mortgage and so it wasn’t mis-sold.
What can you do now?
Your options for repaying your mortgage at the end include:
- making overpayments to your mortgage. This will reduce the balance.
- switching to a repayment mortgage with your current lender. This calculator shows how much your monthly payments would increase. If you change the number of years to go, you can see how the longer you leave this, the more the repayments increase.
- switching part of your mortgage to repayment and leaving part on interest-only. This could be a good option if you have other ways of repaying the remaining interest-only part – perhaps you will get a lump sum from your pension when you retire, or you may be planning to downsize, so by switching part to repayment now you know you will be left with enough equity to buy the smaller house with no mortgage.
- paying more into an investment or saving plan each month. This is a riskier approach than paying the extra amount off your mortgage as the value of your investments could fall.
- using savings to reduce the mortgage. If you could repay some of the mortgage now, you may be able to afford the higher monthly payments for a repayment mortgage.
Improve your finances
Making larger repayments now may seem impossible, so also look at ways improve your finances;
- is everyone in the house paying their fair share of the costs? If your partner just pays the electricity bill and does some of the shopping, that’s not a fair contribution. Adult children at home should be paying you some rent, even if they are on benefits or a low income.
- do you have a spare room that you could rent out? Up to £7,500 a year would be tax-free money that you could pay straight off your mortgage.
- if you have credit card, loan or overdraft debt, look at whether you could win any affordability complaints about these. Don’t use a Claims firm – they don’t get better or faster results and you need every penny you can get back here to pay a chunk off your mortgage.
- look seriously at other ways of cutting your costs or increasing your income.
Take debt advice
If your non-mortgage debts are a big problem, then you need to take some debt advice on your whole situation including your interest-only mortgage. Go to your local Citizens Advice or phone StepChange. You need to be clear with the adviser that you are worried about your Interest-only mortgage and want a plan for your other debts that will allow you start making overpayments to the mortgage.
Be very careful if an IVA is suggested – these typically last for 6 years and during that time you won’t normally be able to make overpayments to your mortgage – this can mean that at the end of the IVA your other debts are cleared but you no longer have enough time to try to sort out your mortgage.
Using your pension
If you are expecting a 25% tax free lump sum when you retire, using that to repay some or all of an outstanding mortgage may well be a good option.
There are options to take more than 25% of your pension when you are over 55. This may sound like a great solution to your interest-only problem, but taking a lot of money out of your pension could give you a large tax bill. It could also mean that you will be broke when you retire, being “house rich and income poor”. Read Should I use my pension to pay debts? for more about this.
Equity Release – “lifetime mortgages”
Another alternative is equity release. You repay your interest-only mortgage by getting a “lifetime mortgage”. Martin Lewis has a good guide to Equity Release.
It may sound like an easy answer, to your interest-only mortgage ending, but there are major drawbacks. In 2023 these are expensive mortgage. Equity release can allow you to stay in your house when you are retired but the costs can mount very steeply.
With a lifetime mortgage, you usually don’t have to make any repayments while you’re alive, instead the interest ‘rolls up’ and is added to the amount you borrowed (unpaid interest is added to the loan). But sometimes you can choose to make repayments – perhaps until you retire completely? Doing this will reduce the rate at which your mortgage size increases.
Lifetime mortgages are becoming increasingly common. But they won’t be possible for everyone with an interest-only mortgage:
- you have to have a LOT of equity. If you have only 20 or 30%, it isn’t likely to work;
- the older you are the more equity you can release.
- many firms quote 55 as the minimum age, but over 70 is more practical. This means both you and your partner have to be over the minimum – it is the age of the younger one that matters.
Sell the house
If there is a lot of equity in your house and it is larger than you need, or you could move to a cheaper area, you should also consider making this move now, rather than waiting until your mortgage ends.
By moving earlier you will reduce your outgoings on your current mortgage and probably also on other costs such as utilities and council tax. Also if you are going to move areas away from your current circle of friends, this is easier to do the younger you are.
Selling your house may be your only option if nothing else will work. Even if it’s not what you want.
It is better to sell your house yourself than have the mortgage lender go to court and repossess the house.
Getting a plan
Often you may need to create a plan that fits your individual situation, taking into account your other commitments, when you are likely to stop work, what your pension arrangements are etc.
A few examples:
- Mr A could decide to convert half his mortgage to repayment now, which he can afford, and plan to repay the other half from the tax-free lump sum from his pension which he can draw when the mortgage ends.
- Mr and Mrs B have car finance which has three more years to run. When that ends, they can start overpaying their mortgage by several hundred pounds a month. This will increase the equity in their property by enough that by 2028 when their mortgage ends they should be able to get a lifetime mortgage.
- Ms C wants to stay in her current house as it’s convenient for her work, but will move to a cheaper area when she retires. She will still need a mortgage at that point, but she can make this future mortgage smaller by getting a lodger for the next few years until she retires and reducing her current mortgage by as much as possible.
You may not be able to come up with a plan that will completely solve your problem, but it will still usually be best to do what you can now. So if you can only afford to move part of your mortgage to repayment now, doing that means you will be in a better position later to tackle the remaining interest-only part. With more equity in your property because you have been paying it off, more options such as equity release may become possible.
Once you have a plan, it’s a good idea to do an annual check that it is “on track”. If at any point you can overpay your mortgage, this may help later if mortgage rates increase.
7 ways to save – is one right for you?
Options when cards are maxed out
The best free ways to check credit scores
Sean says
To put things into perspective, I have been made redundant 3 times in the past 20 years, one of those was during the recession of 2008 and I had to take a job on half my previous salary. This took out all our savings which resulted in the IVA then just as we were getting things in order, another redundancy meant having to take on further unsecured debt… not a choice but a necessity.
Our daughter is at college and hoping to go on to Uni.
Sara (Debt Camel) says
Well when she is at uni, I think she will be able to cope with you having a lodger. It could make a real difference to chipping away at the mortgage.
James says
Part of my interest-only mortgage was due to be paid recently.
The house was prepared for sale and went with an agent recently, I contacted the bank and told them my plan was to sell the house, they told me to keep on paying my mortgage of £380 per month, the house should sell for £830k and the bank is owed £224k in total leaving me with enough to buy a smaller house with cash.
The reason I am saying all of this is to let people know no one needs to panic if they plan to sell a house to pay back their mortgage as the bank agreed to one year to sell and a further extension as long as I have tried to sell and have also been paying the mortgage every month.
As long as you are straight with the bank and let them know your plans then it should be OK.
anthony says
My IO finishes in 5 years owing £67,000. Equity now is £180,000 approx. I had a meltdown 10 years ago, took out loand and a secnd of £40,000 when the balance was £27,000 and spent it on nonsense in online auctions – art work manily which is worth not even a fifth of what I paid. My GP said my auction addiction was a form of gambling & part of my depression. I am 60, and have had an irrational fear of change – that was the reason for the meltdown – I was TUPED to another job. Sounds crazy, I know. Now I get periods of pnic, sometimes suicidal at the thought that in 5 years I will have to move, and unlikely to have my own place. Tiny pension plus state pension will be my income when I retire. Apology for the rambling, feeling it now, so had to let off some steam.
Sara (Debt Camel) says
Can I suggest you go to your local Citizens Advice and ask for some debt advice on your options. It’s better to do this now as you may have more options now than if you wait until the mortgage is about to end.
anthony grant says
Thank you, Sarah, for the reply, I will have to. i was thinking of asking my lender to extend the time period – until my death. At £380.00 per month it would be affordable even when I retire.
Idris says
I took a mortgage out back in the early 2000’s Via a broker and I am 69 and I have nearly 130,000 still to pay on the property that I took it out on and I’m literally going to retire in 8 -12 months time.
I have paid the actual mortgage off a long time ago , possible several years ago and all I’ve been paying is just interest since then.
I also wasn’t aware I was going to be taking a interest only mortgage. This is why am baffled at the sum that’s still there which is approximately 60% of my home value.
I only realized when I sat down in front of the tv one day and looked in to my mortgage statements.
Can you help me because something has gone very wrong.
Thank You.
Idris.
Weatherman says
Hi Idris
I’m a bit confused here as well! If this was an interest-only mortgage, then you *haven’t* paid the mortgage off – your payments go towards the interest until a certain number of years later, at which point you need to repay the outstanding balance.
I would start by contacting your mortgage provider to check what type of mortgage you have with them. If you won’t be able to repay the amount that’s due, the best thing to do is get some debt advice by contacting National Debtline: 0808 808 4000
You *might* also be able to make a complaint about the original sale of the mortgage, but there are time limits that apply to this. If the broker has gone out of business, you would need to apply to the Financial Services Compensation Scheme (FSCS), but if not, then the Financial Ombudsman Service (FOS) – the time limits are the same for both: https://www.financial-ombudsman.org.uk/faqs/all/time-limits-consumers-making-complaint-complaint-time
Idris says
Hi ,
Apologies for the delayed response. I have been very ill and much better now.
Any how the mortgage I have is interest only and I remember the broker persuading me to take out this this option at the time 16 years ago.
I don’t have any other investments or ISA’s in place.
What do you think I should do as the mortgage term is due to come to a end in 6 months ?
And another thing
There was three loans I’ve paid Two off
This is the only one that remains.
This interest only lump sum has remained for the past 10 years.
Sara (Debt Camel) says
So you do remember this mortgage was interest only? You should have had several letters over the years from your mortgage lender asking you what plans you had?
There may be a possible case for mis-selling given your age. You could talk to your local Citizens Advice to see if they could help you with this.
But you must not assume a complaint is likely to come to your rescue – you need a plan for what you will do when the mortgage ends.
What your options are depends on your situation:
– is anyone in your family able to help you? Are you living on your own?
– you could look at equity release/lifetime mortgages (see https://www.moneyadviceservice.org.uk/en/articles/lifetime-mortgage) or retirement mortgages (https://www.moneyadviceservice.org.uk/en/articles/retirement-interest-only-mortgages). I can’t say whether you would be offered either of these, but the equity you have, your age and health are important.
– you could consider selling and moving a smaller/cheaper place possibly in a different cheaper area. This may not be what you want to do but if equity release or remortgaging aren’t possible or you don’t like their implications, then selling the house is your fall back.
Graham says
Hi Idris,
Im in a similar situation to you with my mortgage i/o about to end. I am wondering how you managed to sort this out and if you have any advice?
Thanks
Sara (Debt Camel) says
You may well not get a reply as many people don’t carry on reading this pages if their problem is sorted.
Yule says
Our interest only morgage is up in October and have not missed any payments and cant afford to pay it off tried to get a life time morgage but unsucseful my building society is not allowing us to increase the term we dont want to sell if Building Society try to repossess can I fight this decision
Weatherman says
Hi Yule
If you think the Building Society’s decision not to let you increase your term is unfair, you could complain to them, although there’s no guarantee at all you’ll be successful.
If you can’t repay (either with a lump sum or buy selling the house), then they have the right to repossess the property and get their loan back. You can try to challenge a repossession order in the courts, but from what you’ve said it’s unlikely you would succeed.
I would speak to National Debtline, who can go through your options in more detail: 0808 808 4000
Christine Yule says
Thank you for your repky
James says
Yule
Talk to your bank issuing the mortgage.
My mortgage term was up too.
I phoned my bank and they were not willing to extend the mortgage.
But they did treat me fairly, they gave me two months to decorate the house and put it on the market, then six months to sell and told me if it was not sold in that period then another six months would be automatically allowed.
They will also want to see the house is on the market eg Rightmove and with an agent for sale.
But it is best to speak to them as they should be fair with you.
Trixi says
Another option is to walk away especially if the house won’t sell what other option is there ..
Sara (Debt Camel) says
You should take advice on your options before you decide this. Talk to National Debtline on 0808 808 4000 – they have Scottish advisers too.
Glenys says
Hi Sarah I hope you can give me some advice , my husband and I are in our 70’s we had to sell our house as it was the end of term . We have an equity of £90000 , have you any advise for us , we are both on state pension and worried about renting . The area we live is far to expensive to buy and moving we would be leaving family and friends. Glen
Sara (Debt Camel) says
Well no debt advice. It’s up to you if you want to live in the same area and rent or move elsewhere and start again. Moving if you are in your early 70s and fit is a lot more attractive than if you are in your late 70s or have health problems.
Glenys says
Thank you Sarah do you now if at our age and only state pension as income we would be able to get a small mortgage ? Glenys
Sara (Debt Camel) says
Are you both getting Pension Credit as well?
You could look at the “borrowing in later life” section of the government’s Money Helper website: https://www.moneyhelper.org.uk/en/homes/buying-a-home
Paula says
I have a bank IO buy to let for a property I brought for £112,000 the mortgage was for £95,000. I am 43 now and this IO finishes in 7 years time. The property has a long term rental agreement. I am unemployed at the moment due to illness but in the future hope to get back on my feet and start working again but it most likely be a minimum wage job. The rental agreement is for 10 years. When the IO comes to an end would the bank accept the rental income as a source of income for the property? Especially if once I get back on my feet and can work my income from the will not be acceptable? Or should I start thinking about selling it?
Sara (Debt Camel) says
How much is it worth?
Mark says
Hi Sara, I am almost 59 and I have a repayment mortgage and am thinking of switching it to an interest only mortgage. I don’t have any assets but I am the sole beneficiary of my mum’s Estate which is quite substantial. I’d like to go part-time at work so I can spend some additional time to help look after my mum. Obviously, I wouldn’t expect my mortgage provider to accept inheritance as a viable repayment plan but do you think they’d accept equity release as a viable option? The mortgage has 9 years left to run. My mortgage is £86,000 and my house is currently worth around £340,000.
Sara (Debt Camel) says
A normal mortgage lender will not offer equity release. You would have to talk to a specialist lender. And you should also look at Lifetime mortgages as they may suit you better, but they are typically only available for over 60s.
Mark says
Thank you for your reply. My mortgage is with Halifax so do you think they’d let me switch it to an interest only mortgage if I gave them a written guarantee that I’ll be getting a lifetime mortgage with another provider before the end of the mortgage term? Basically, do you think it’s worth asking the question? Or do you think they’d only let me do that if I had e.g. 25% PCLS to cover the mortgage value?
Sara (Debt Camel) says
You have nothing to lose by asking these questions. I have no idea if Halifax is likely to be sympathetic.
Is your mother’s money all tied up in a house?
Mark says
Hi Sara, No she has a lot of savings in different accounts and I am a joint account holder. As odd as it sounds she is very old fashioned (raised during the Second World War) and I have never asked her for a penny in my life. I’d always have to wait for her to volunteer to help. Let’s just say she’s very frugal and at 87 very sharp in her mind. Thank you again.
Sara (Debt Camel) says
Well honestly I think you should have a sensible conversation with her about this. Say you would love to be able to drop to 3 days a week (or whatever) which will make it a lot easier for you to pop over, do her shopping, see her more often etc. But explain that your mortgage has got 9 years to run and you don’t think you can afford to as your alternative mortgage options are all much more expensive (which is true).
Mark says
You’re probably right. Thanks again.
Danni says
Hi,
I currently have an interest only mortgage which I originally took out in March 2008 and entered into another fixed rate with my original mortgage provider in the last couple of years to reduce the payments from £360 per month to £206 per month. I also took out a second charge mortgage in 2018 which is £404 per month to consolidate some debts. I have recently tried to re-mortgage so that I can reduce my monthly outgoings by combining the 2 mortgages and also to get away from an interest only mortgage as I have no vehicle to pay the sum at the end. I am 41 so wanted to get the capital repayment mortgage in place soon to allow me enough time to pay it off but I have been advised that my combined mortgages are more than 100% LTV. I contacted the second charge company to get some details and they have advised that when they gave me the second charge mortgage the LTV was 108.13%. At present based on the valuation I am getting from broker at LTV is currently 109%. I have another 4 years of the second charge mortgage and 12 years of my original interest only mortgage. Are there any options I can consider as I am afraid that if i leave it too long I wont be able to afford the repayment mortgage due to not having as many years to pay it. Thanks for any advice available.
Sara (Debt Camel) says
do you have any other debts?
what interest rate are you paying on the second charge mortgage?
Danni says
I have about £2.5k of credit card debt and car finance. This is the text on the mortgage info that i was given, as I am not sure what is the actual interest rate.
The annual percentage rate of charge (APRC) is the total cost of the loan expressed as an annual
percentage. The APRC is provided to help you to compare different offers.
The APRC applicable to your loan is 33.33%.
It comprises:
Interest rate
• A variable rate of 26.82%.
Costs to be paid on a one-off basis
• Product Fee: this is charged to you as you have been referred to us by an introducer, (this can
include associated group companies). We will pay to them a commission for the introduction.
You want to add this fee to this mortgage. £1,499.00
This fee is payable on completion to Evolution Lending Limited and it will not be refundable.
• Lending Fee: this covers the services we will provide in assessing and processing your loan
application. You want to add this fee to this mortgage. £699.00
This fee is payable on completion to Evolution Lending Limited and it will not be refundable.
Costs to be paid regularly
None – but see section 5 for the loan repayments
Sara (Debt Camel) says
That is a very expensive secured loan. How large is the current balance on it?
Danni says
The current balance is showing on my credit file £13,271 however I still have 48 payments of £404 to make on it
Sara (Debt Camel) says
How long ago did you take out this second mortgage? Did you receive any advice on this?
How expensive were the debts which you were consolidating?
Were you aware at the time that this mortgage was putting you into negative equity?
Are the 404 payments affordable and how much extra could you pay each month?
Danni says
Hi, I took it out in 2008. It was mainly done online & via email. I did have a call with someone who went through my application but i dont recall getting advice on this.
The debts amounted to approx. £10790 (£10k amigo and £790 provident) and were costings me about £380 per month i think. I also got about £4k and then about £2.1k for fees.
No i hadn’t realised that i was more than 100% LTV. My paperwork mentions 18.3% LTV but i assume this only includes the evolution loan.
They are just about affordable at the moment but I am not in a position to overpay
Thanks
Sara (Debt Camel) says
Can I double check? The original mortgage was in 2008? When was the secured loan?
If you haven’t already done this, put in a claim to the Amigo scheme for unaffordable lending. The deadline for doing this is soon so just do it now, don’t hesitate. See https://debtcamel.co.uk/amigo-scheme-claims/. This won’t solve your current problem but every little helps!
Danni says
Sorry original mortgage 2008 and secured loan 2018.
Thank you I will look into that
Ann says
my interest rate mortage ends next April 2023 am sick with worry .I really want to keep the house i earn my income here by taking in 2 lodgers if i downsize i will have no income.any advice
Sara (Debt Camel) says
Can you give some more details? These form a jigsaw and you need all the bits to see the full picture.
How much is the house worth? How large is the mortgage?
How old are you?
Do you have any other debts? savings?
Karen says
I took out an Interest Only mortgage in 2007 £133000 over 22 year term. I have only just realised due to the lender changing from LIBOR to SONIA rate that my original offer was as a rate of 3.30% above the LIBOR rate after my fixed rate period of 3 years. So since 2010 I have been paying 3.30% in addition to the LIBOR rate and now the same above the SONIA rate which seems a grossly unfair product. I have suffered financial hardship over the years (completed IVA) and have not been able to afford a repayment vehicle. I feel the in excess of 50k I have paid just due to the 3.30% in addition to LIBOR would have easily paid for a repayment vehicle.Do you feel this would be a legitimate complaint?
Sara (Debt Camel) says
Not really. Why did you not change to a new fixed rate 19 years ago when your first fix ended?
What is the rest of your financial situation like now?
How much is the house worth now and how old are you?
Karen says
As stated my fix rate was for 3 years from 2007. So ended 12 years ago,not sure where you get 29 years? This was a self cert mortgage interest only so didn’t feel I had an option to surf for rates. I will see what the FOS response is. 3.30% above LIBOR rate does seem unfair but I could be wrong. My current finance rating is good.
Sara (Debt Camel) says
sorry I misread your perfectly clear comment as meaning the mortgage started 22 years ago!
So there is 7 years until the mortgage ends. What are your plans then? Are you making any overpayments now?
Karen says
As I have been paying 3.30% over the LIBOR rate for 12 years and this is equares to 50k plus I have not been able to afford a repayment vehicle let alone make overpayments. My rate after SONIA rate being applied is 6.30% and imy monthly payments are currently increasing by £100 every 3 months. If the FOS decide this product is fair I will have to sell my property. Although my credit rating is good now and I am in fulltime employment, I am single and this rate increases along with other cost of living increases is crippling. I do feel the 50k overpayments I have been forced to pay would have adequately paid for a repayment vehicle so wouldnt have been so negatively impacted. It will be interesting to see the FOS decision.
Sara (Debt Camel) says
It will be interesting- come back and let us know what happens!
Oliver says
Very informative and well-articulated post. Thank you.
Tim says
Can anyone offer any advice please. I’m 59 and retired and my wife 56 and working full time. We have an adult disabled daughter who lives with us and another daughter who is studying at University. Our son who is married comes back through the year to stay and visit. We want to move house but atm can’t downsize as we still need the space. Many properties I’ve seen are a lot smaller than what we currently have, and any comparable ones are more expensive. On the plus side we have a lot of equity in our house. It’s worth around £290k and have £37k to pay off. I have been looking at interest only mortgages which would mean getting a property similar to the size of ours would be more affordable. Because of the equity we’d look to put a big deposit down possibly up to £210000 for a property costing around £310-335k. We don’t have any other ISA’s or savings, but because both sets of parents are older are expecting 2 inheritances at some point in the future. Would it be possible for us to obtain a 10 year fixed rate interest only mortgage for the above amount. Would the fact that we would be putting such a large deposit down help?
Sara (Debt Camel) says
Why do you want to move? Your current mortgage is a repayment mortgage?
Tim Campbell says
Hi Sara thnx for replying, we are wanting to get a bit closer to my mum, and also aid my daughter better by being closer to her daycare. It would make things a lot easier for us. We do indeed have a repayment 5 year fixed rate mortgage at present with just one year into it. The interest rate is very good at 1.22% with 4 years to run. I was really just sounding out what was possible if we decided to move and our options. Santander has said it would be possible to Port our mortgage but at the current prices to get something of a similar size we’d need to extend our mortgage by approximately £60k. We would like to keep the payments manageable so had naturally thought of interest only. We would be open to downsize when my daughter moves out but have seen Halifax doing fixed rate interest only deals for 10 years which should cover us until circumstances around us change.
Sara (Debt Camel) says
Well this is not debt advice but common sense. You have.an enviably cheap mortgage in a house that suits you but will be larger than you need in a few years times. Why not talk to Halifax and see what they say? Your fallback position of staying where you are for a few years and then downsizing doesn’t sound that bad. It’s hard to make small adjustments to houses for temporary needs – it will cost you a lot of money in in buying and selling costs even if you can get a mortgage sorted out.
Rachel says
Hi
Can you please advise and help me. I have an interest only mortgage which has about 5years remaining. I am looking at all my options now. I can’t afford to remortgage as I have 123k left on my mortgage and my retirement is in 13yrs. My income is £20200. Can I get part repayment mortgage. I also have 200k equity in the house. I would like to stay here for my son. Then when I retire get a small home but can’t do this yet
Sara (Debt Camel) says
Is your son living with you?
Geoff says
Hi
Can you please advise and help me. I have an interest only mortgage which has expired. Lender will not extend. 60% LTV. No arrears.. I am looking at all my options now. Younger of us aged 62. Salary 120K pa (one of us gets state pension) I can’t afford to remortgage save interest only. I also have 200k equity in the house. I would like to stay. The Lender knew I had no means of repaying loan when I took out mortgage and I was just told we could renew it at the end (have nothing in writing on this last point). I recently had a friend who extended their loan another 10 years so thought it would be easy. Seems unfair I have to sell house when they knew I would never be able to pay off mortgage other than a sale. The lender in last 2 years has been warning me loan repayment date soon .
Sara (Debt Camel) says
how large is this mortgage? who is the lender?
You are earning 120,000 a year?
Gabrielle says
Hi Sara, i took out an interest only mortgage when I was 24 with my husband, he earned £2100 a month and I wasn’t employed properly. I had a few work payments of like £300 per month for some freelance media work back in 2003. We were sold an interest only mortgage, we had £30k deposit (bank of parents) bought a house in E London for £135000 (lucky I know). Interest only mortgage from 2003-2-09. We’ve never switched, since we bought this house it’s been doom and gloom economically, we had kids (4) from 2001-2018 and while I now earn over 50k, it’s only now I have more disposable income, we renewed mortgage (again interest only – same company kensington) about 14 years ago. Not many Q’s asked – no-one ever explained properly the consequence of an interest only mortgage – ever! Not ever! Do I have any grounds for complaint for it being missold?
Sara (Debt Camel) says
When does the mortgage end? Is it still 105k?
How much does your husband earn now?
What other debts do your and your husband have? How many children still at home?
Ian Jones says
I have 4.5 years left on an IO mortgage with Birmingham Midshires. The current balance is £136000, I am overpaying and hope that it will be paid in full when the term ends in July 2028 so not expecting any issues. However my question is what is the likely outcome from BM if I have circa £25k remaining when the terms ends?
I just wandering if anyone had any experience with Birmingham Midshires? Will they repossess immediately? Will they allow more time to finish paying off if I have an 8 years overpayment history, etc?
Sara (Debt Camel) says
That is 4 years away – any past history may not be that relevant at that time.
Ian says
But do you have any advice as to what the process will be if there is a balance left of only say £25k if I have the ability to pay it over 6 months or similar?
Sara (Debt Camel) says
I would be very surprised if they do not allow you to repay the remaining balance over a 6 month period.
James says
In May 2020 my IO mortgage was due to end, I was prepared for it and the sale of the house was part of my planned pension pot.
Lloyds Bank was very flexible, I was stuck in Thailand until August 2020 due to COVID-19 as there were no flights back to the UK, and Lloyds gave me until November 2020 to put the house on the market.
I did so and they gave me until May 2021 to sell the house, all I had to do was show them the house was for sale on Rightmove.
I had a buyer but the sale was not going to be completed until June 2021 so they gave me until November 2021 to complete the sale.
I was sold in June 2021.
I am sure your lender will be flexible over 25,000 pounds and will give you time to sell up or pay the 25,000 over time.
I contacted Lloyds bank one year before the end of my term and they said they could not do anything until the actual termination date but they did tell me they would give me time to sell so I made a short phone call on that date and was given a six-month extension and a promised further six-month extension.
I had to keep on paying the monthly installments so the account did not go into arrears which was fine.
But I would suggest you call the bank a year before the end date to see if they can do anything at that point.
If you are upfront and straightforwardly dealing with them they should be flexible with you.
Good luck.
Jarrod says
My 15-year term interest-only mortgage expired in 2020 resulting in £140k debt being payable immediately. Unable to pay the debt or access new lending, I continued paying monthly instalments until this year (3+ years without repossession proceedings being instigated)
During this period, no correspondence, nor actions specifically required the whole debt to be repaid.
Much correspondence received informed me of increasing monthly payments due to rate rises. Other correspondence received was titled ‘mortgage arrears’ highlighting monthly payment arrears i.e. £1 in arrears, £600 etc (now 4k). Towards the end of some letters was a reminder ‘The mortgage term ended in 2020 and £140k remains payable, as there is no formal agreement in place’.
Now repossession proceedings have been instigated; I understood this to be due to the monthly arrears. However, legal submissions to the court state ‘the loan has now expired’. There’s nothing about monthly arrears plus it states ‘the claimant has previously taken possession proceedings against the defendants’ which if this was the case I was unaware of & incurred no costs.
Based solely on the above would you see there being anything amiss legally? Or procedurally wrong?
Personally, between 2020 & now, I incurred lockdowns and all that brought, initially had COVID-19, now suffering long COVID and was diagnosed with bowel cancer, now in remission.
I’m looking at all the options
Sara (Debt Camel) says
Talk to National Debtline on 0808 808 4000. You need urgent help from a debt adviser now to are being taken to court for repossession
Jarrod says
Hi
Before posting, I had already been in many discussions with a variety of organisations and lenders, seeking options available to prevent repossession. I’m now relieved to say that I’ve succeeded via the equity release route, which, while not ideal, keeps the roof over my head and cancels the forthcoming repossession hearing date.
During these discussions, I realised that from 2020 (when my 15-year interest-only mortgage term expired) to 2024 (when I seemingly had no mortgage in place), means I went for over 3+ years without a mortgage. so I was wondering how the lender allowed this to happen.
This prompted my post, seeking opinions on whether there are governmental or industry guidelines in place that stipulate what should happen when a mortgage term ends. If so, what are they?
Sara (Debt Camel) says
See https://england.shelter.org.uk/housing_advice/repossession/options_if_you_cannot_pay_off_your_interest_only_mortgage/term_has_ended.
The full Court Pre Action Protocol for mortgage arrears is here https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_mha
This is an overview of the steps: https://england.shelter.org.uk/professional_resources/legal/possession_and_eviction/mortgage_possession_proceedings/lenders_steps_before_court_action_for_mortgage_arrears
Zee M says
Hi please can I get some advise about a buy to let property my brother and me purchased in 2007. We brought off plan in Stockton on tees through a company called Churchgate and permission homes. We were told we were getting a substantial discount and advised to have a buy to let interest only mortgage. We paid a £4000 deposit. I left the UK in 2008 so my brother took over the ownership of the property and gave me back my original deposit of £2000. What I didn’t realise was that my brother never changed the paperwork so unknown to me I am still on the mortgage. My brother died and now because I am still on the mortgage the whole debt comes to me. The thing is now that we have looked into it, it seems the orginal selling prices were inflated and we never got any discount like we were told, in fact it looks like we paid over the odds. We paid approx £121,000, looking into recently sales of these properties they have only ever been worth £60,000, therefore I think we were lied to about the original valuations, also on the land registration it says we paid less than we did as our deposit is nowhere to be seems. We were given a mortgage that was suitable and unaffordable for the actual property itself. So now I own a property with a mortgage of £107,000 on it that’s only worth £55 to £60,000. Due to my brothers passing I have only recently found out that I am still liable for this.
Sara (Debt Camel) says
I can’t help with this, sorry. I suggest you talk to National Debtline on 0808 808 4000