What Happens At The End Of An Interest Only Mortgage And What To Do

About one quarter of the mortgages held in the UK are on a buy-to-let basis and a lot of those people do not have a mechanism or a way of paying back that loan at the end of the period. In this article I’m going to share with you some strategies on What Happens At The End Of An Interest Only Mortgage and What To Do.

Contact Your Lender

The first thing I would suggest you do is Contact Your Lender. Do this at the earliest opportunity, do not wait to the last minute for example when you’re in the last month of your mortgage. 

Do this early so that you can open negotiation channels. 

Remortgage

Remortgage, consider a remortgage, if you’re young enough or meet the eligibility status, it’s possible that you could get a remortgage so it’s best to approach your lender at the moment or look at a stream of lenders and see if with your current status if you can be able to remortgage your property. 

You might be asking yourself, can’t I just continue to pay the interest only mortgage charges on the property? Unfortunately the mortgage has come to an end and is pretty much set in stone. The mortgage amount has to be redeemed, that loan has to be paid back so this is possibly not an option that you can consider. 

Downsize

Another option would be is to Downsize or move to a cheaper area. If you bought a property let’s say 20 years ago, there’s a chance that there’s quite a bit of equity in the property. That equity could be offset against buying another property, if it’s cheap enough in that area. If not, you may want to consider moving out of that area and move into a cheaper area and downsizing your property. So you would sell your property, use the equity that comes from the sale and then use that money to buy a smaller property and end up with a house to live in and your mortgage paid off. 

In summary, there’s no easy answer to coming to the end of your interest only mortgage. The key is to really act quickly even if your mortgage is years away because years turn into months, months turn into weeks and before you know it the mortgage is due. 

So the key is to act early, look for an exit strategy early. Get some consultation, get some advice and act early and you’ll be okay.