With house prices rising at an alarming rate over the last 25 years, interest-only mortgages have, for some, become a necessary way of gaining access to the UK’s domestic property market. To many, these financial instruments have been a critical leg-up on the housing ladder. However, the popularity of this type of borrowing brings with it some drawbacks.
An interest-only mortgage will cost the borrower significantly less each month because the monthly repayment comprises just interest. There is no capital repayment element to the mortgage meaning that at the completion of the mortgage term the original loan will still need to be repaid. Of course, as the loan amount never reduces, borrowers actually end up paying more interest over time but early in the mortgage this issue is of little interest to the young first-time buyer.
Initially, interest-only mortgagors either linked their interest-only mortgage to the maturity date of a pension policy or life assurance, or to a specific mortgage endowment policy that would repay the mortgage at the end of the term. However, many never planned a means by which they planned to repay the outstanding debt at the end of the mortgage or endowments and other securities have not performed sufficiently to entirely repay outstanding debt.
The most radical option when a mortgage term comes to an end is to repay the loan by selling your home. However, given that we all need somewhere to live this is usually not a preferred option!
There is good news. If you took a mortgage 25 years ago it’s likely that you now have significant equity in your property due to rises in capital value. Furthermore, the real value of your loan has been eroded over time by inflation meaning that the £60,000 you may have borrowed to buy your first home 15 years ago is now an affordable sum to borrow over the next 15 years.
This should mean that you are well placed to obtain a new repayment mortgage that can still be serviced affordably by you over the next 15 - 20 years, or perhaps more, dependent on your age and personal circumstances. Indeed, as long as you can illustrate a satisfactory post-retirement income stream there is no reason why you couldn’t borrow well past retirement age. If you are now approaching 55 years of age then releasing equity through one of the many lifetime mortgages now available is also a viable option for many.
But one thing is certain. If you are one of the estimated 2.6 Million people with an interest-only mortgage that expires within the next 10 years, now is the time to at least consider how you are planning to repay it. It is reported that as many as 260,000 people have no plan whatsoever for how they will repay their outstanding home loan at the end of the mortgage period - a sobering statistic.
At Mortgage Required we have been considering options for our clients with interest-only mortgages for some time now and we have lots of ideas for you to consider. If you have an interest-only mortgage that expires before 2028 then don’t delay. Call us now on 01628 507477 to see how best to plan a stress-free solution that meets your needs.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
Best UK Mortgage Rates this Week
Yesterday
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Nationwide is the first lender to allow mortgage deeds to be signed electronically and without the need for a witness.
‘My First Mortgage’ from major high-street lender Santander is specifically for those wanting to buy their first property. It allows first-time buyers to purchase 98% of the property’s value. However, certain criteria must be met to be eligible.
Maidenhead, Berkshire – 26th January 2026 – Dedicated independent mortgage experts, Mortgage Required, are delighted to have acquired fellow experienced brokerage, Y-Not Finance.
The acquisition connects two well-respected brokerages, both with a wealth of experience and shared values, to continue providing the best advice on all aspects of the mortgage market.
As part of the UK government’s plans to change the leasehold system to help families struggling with unaffordable ground rent costs.
The Prime Minister announced this morning (27 January) that ground rents will be capped at £250 per year, reverting to a peppercorn rate after 40 years.
Additional borrowing, also known as a further advance, is when you borrow more money on your existing mortgage for a specific reason agreed with your lender.
Here are five of the most common reasons for additional borrowing.
UK Housing Market Round-Up: 2025
30 Dec 2025
Property search site Zoopla has estimated that the UK housing market will end 2025 with approximately 1.15 million completed sales – 4.5% more than the previous year.
Take a look at the 2025 summary of the UK housing market.
Buying in the New Year
29 Dec 2025
If buying your first property, or moving home, is on your to-do list this year, the new year can be a great time to take this big step. In this short blog, we look at what you need to consider as you plan and prepare for your home-buying journey.
More information
Trusted by
