Is Your Interest-Only Mortgage Maturing This Year? Here’s What You Need to Do

Tens of thousands of interest-only mortgages are set to mature in 2019, meaning countless homeowners face having to repay their full loan at once. It’s estimated that 81,400 interest-only mortgages worth a total of £9.2bn will mature this year, according to predictions from Experian for the Financial Conduct Authority. With interest-only mortgages requiring that holders only pay the interest on the loan each month and the capital at the end of the term, they’re often a popular option amongst those with significant sources of income or promising investment opportunities. For those who approach the end of their interest only mortgage deal with their home’s capital in savings or accessible investments, it can work out a worthwhile choice. However, many people are left short of the money they need, forcing them to seek alternative arrangements. If you have an interest-only mortgage that’s set to expire, you may be worried about what action to take. Here are a few things to consider.

Extend your mortgage term

If it’s possible to extend your mortgage term, this will give you more time to seek ways to pay the capital. If your property’s value increases over this period, this will also help you cover the shortfall if you were to sell your home.

Remortgage

Switching from an interest-only mortgage to a repayment mortgage could help you avoid a hefty bill at the end of your term, but it will see your monthly payments shoot up significantly. Lengthening the mortgage term could help to soften the blow and make your monthly expenses a little more manageable. Whether you can remortgage your home or not depends on your lender and your current mortgage terms.

Start overpaying in advance

If you still have some time left before your mortgage matures, making overpayments now will allow you to begin paying off your debt in a more manageable time frame.

Sell your home

Selling your home can be one of the most effective ways of paying off an interest-only deal. If your property’s value has increased since you bought it, you may even be able to pay off the capital and buy yourself a new home - whether outright or with a repayment mortgage. If you’d like expert advice to help you determine your best option, please get in touch with the team at TaylorMade. Our talented mortgage brokers can help you weigh up your options and find the best solution for you.