My interest-only mortgage term is ending: What are my options?

Many homeowners who opted for interest-only mortgages several years ago are finding themselves facing the task of deciding the next steps for their mortgages, with their interest-only period coming to an end.

If you are an older borrower then you may also feel that the options open to you are limited.

This transition can be both challenging and crucial, requiring careful consideration and informed decision-making.

Options to consider

If you’re coming to the end of your interest-only term, there are a variety of options for you to consider. You could inquire about remortgaging with a new lender, which could offer an opportunity to secure a better interest rate or more favourable terms.

However, it’s important to weigh the associated costs and factors. Part of remortgaging can include a 'lifetime mortgage', allowing you to stay in your home while accessing equity tied up in the property.

This option may not be right for everyone, as it may affect your entitlement to benefits. When remortgaging you could explore the option of a Retirement Interest Only mortgage (RIO).

Available to over 55’s, a RIO is a loan secured against your home and you pay interest each month, meaning the amount you owe doesn’t increase overtime. This could be the best option for you, but it’s important to discuss and explore your options carefully.

These aren’t the only options when coming to the end of your interest only mortgage term. You could also explore other avenues such as switching to a repayment mortgage, downsizing to a smaller property, adopting a part and part mortgage, or extending your interest only period with your current lender.

Extending your mortgage term is typically considered on a case-bycase basis and may require you to demonstrate your ability to repay. Reaching the end of an interestonly mortgage term marks a significant milestone for many homeowners. It’s a moment that

calls for careful consideration and decisive action.

There are many options available to you but navigating these options can be complex. When looking at alternative options it’s important to consider affordability, term and end date of any required new borrowing.

Seeking professional advice

When facing this decision it’s important to seek professional advice from a suitably qualified mortgage adviser able to consider both conventional and Lifetime Mortgages.

Your adviser can offer support in understanding the implications of each decision, including the financial commitments involved and any potential risks.

By exploring the available options, seeking professional advice, and engaging with your mortgage adviser, you can navigate this transition with confidence, ensuring a secure financial future for you and your family.

For more information, please contact me directly and we can discuss the options available to you.