Interest-Only Mortgage Ending? Your Options
On an interest-only mortgage the whole loan is due on the last day of the term. If the plan you had for repaying it has fallen short, you are not alone, and you have more options the earlier you start. The FCA has found a large share of interest-only borrowers expect some shortfall at the end.
- How many borrowers face a shortfall
- Every option, from remortgage to selling
- Retirement interest-only as a follow-on
- Starting early, and talking to your lender
broad range of UK lenders
Momentum Financial Services Ltd · FRN 1011740
a real adviser, start to finish
rates, fees & total borrowing
Tell Us About Your Interest-Only Mortgage
Share the balance, the end date, the lender, the property value, your income and pensions and any savings or investments meant to repay it. We will set out the realistic options, with advice built around your circumstances rather than headline rates.
Enquiry Form
Tell us about your situation and we'll get back to you with tailored advice.
The scale of the problem
Fewer loans, but still many. The FCA found about 750,000 interest-only and 245,000 part interest-only mortgages outstanding at the end of 2022, both around half the 2015 level.
Maturities still to come. The largest numbers of those mortgages are due to mature in 2031 and 2032, at about 72,000 and 77,000, with a smaller peak in 2027.
Shortfalls are common. In the FCA's research, 36 per cent of borrowers expected some shortfall at maturity, and its modelling suggested the true figure could be closer to 46 per cent.
Your lender cannot ask early. As Shelter notes, the lender cannot demand the capital before the term ends. The FCA encourages borrowers to contact their lender early, and says doing so will not affect your credit rating.
Start at least two to three years before the end date if you can. Some options depend on your age and income at the time you apply, and they narrow as you get older.
At a Glance
Your options compared
The main routes when the capital cannot be repaid in full. Each depends on your age, income and equity.
| Option | How it works | Points to know |
|---|---|---|
| Remortgage to repayment | A new mortgage that repays capital and interest over a new term | Needs income to support the higher payment and a term within the lender's age limits |
| Part and part | Some of the loan moves to repayment and the rest stays interest-only | Needs a repayment plan for the interest-only part |
| Term extension | Your lender extends the term, sometimes alongside a switch to repayment | Costs more interest overall. Depends on the lender's age limits |
| Retirement interest-only | A new interest-only loan with no end date, repaid when the home is sold | Needs lifetime affordability on retirement income. Usually from age 55 |
| Lifetime mortgage | Equity release with no required payments and rolled-up interest | Needs a qualified equity release adviser. The balance grows |
| Sell or downsize | The sale repays the mortgage, and you buy a cheaper home | Needs enough equity and allows for moving costs |
Using savings, investments or a pension lump sum to reduce the balance can open up more of these options. Take advice before drawing on a pension.
Choosing the right route
If you can afford some capital repayments. A remortgage onto repayment or part and part keeps the home and steadily clears the debt. Our page on mortgages over 70 covers lender age limits.
If you can afford the interest but not capital. A retirement interest-only mortgage keeps the payments similar and removes the end date. The FCA has proposed counting follow-on products such as RIO as a credible repayment strategy in future.
If you cannot afford the payments at all. Equity release or downsizing may be the answer. Equity release needs a qualified specialist.
If the end date has passed. Talk to your lender straight away. Many will agree time to arrange a solution, and free debt advice is available if you are struggling.
Bring a clear picture to the conversation: the balance, the value, your income now and in retirement, and any savings. It shortens the process and widens the choice.
Where to go next
The pages most often read alongside this one.
How we help when interest-only is ending
We look at every route, then narrow it to what works for you.
Review the mortgage
Balance, end date, lender and any repayment plan.
Assess your income
Earnings and pensions, now and in retirement.
Compare the options
Repayment, part and part, RIO, downsizing or a referral.
Arrange the solution
With your lender or a new one, before the term ends.
Completion
The old loan is repaid and the new plan is in place.
Read more about borrowing later in life
Related guides.
Interest-only term ending soon?
Tell us the balance, the end date and your income. We will set out the realistic options.
Whole-of-market mortgage adviceOur feesContact us
Interest-Only Mortgage Ending: Frequently Asked Questions
What happens when an interest-only mortgage ends?
The full balance is due on the last day of the term. If it is not repaid, the lender will discuss options, but it can ultimately take action to recover the debt.
What if I cannot repay my interest-only mortgage?
Options include remortgaging to repayment, part and part, a term extension, a retirement interest-only mortgage, equity release or selling. Speak to your lender and an adviser early.
Can my lender ask for the money before the term ends?
No, not while you keep to the terms of the mortgage. The capital is due at the end of the term.
Will contacting my lender affect my credit rating?
No. The FCA says speaking to your lender about your options will not affect your credit rating.
Can I extend my interest-only mortgage?
Sometimes. Lenders consider extensions case by case, often alongside a switch of some or all of the loan to repayment, and within their age limits.
Is a retirement interest-only mortgage an option?
Often, if you are 55 or over and can show you can afford the interest for life from your retirement income. It removes the end date.
How many people have interest-only mortgages?
The FCA found about 750,000 interest-only and 245,000 part interest-only mortgages outstanding at the end of 2022.
When should I start planning?
Ideally several years before the end date. Some options depend on your age and income when you apply, and they narrow over time.
Can I use my pension to repay it?
Possibly, from a tax-free lump sum or other savings. Take financial advice before drawing on a pension, as it affects your retirement income.
Should I sell my home to repay it?
It is one option, and downsizing can clear the debt and free up money. Weigh the moving costs and whether a smaller home suits you.
Written and reviewed by Osman Emin, CeMAP, mortgage and protection adviser · FCA register OCE01003 · Updated YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.