Latest News

How Do You Plan to Repay Your Interest Only Mortgage?

14th September 2017

According to data from the Council of Mortgage Lenders, 1.9 million people in the UK currently hold an interest-only mortgage. An interest-only mortgage is one where the borrower only pays off the accrued interest in monthly instalments – rather than paying off the principal of the debt.

The appeal of interest-only mortgages lies in their low monthly payments. Borrowers aren’t required to chip away at the principal of the loan. In fact, they only need to pay the principal in full when the mortgage term ends.

Many of our existing clients have interest-only mortgages, so if you have one and haven’t yet given any consideration to how exactly you will pay off the loan, it’s is probably time to put a plan in place. At IMC, our experts are well-versed in this area. Together we can work to secure your position.

What could work?

1. Try to overpay your mortgage
This can be done through a surplus in your monthly income and expenditure allowing you to pay extra each month or via a lump sum payment, perhaps after receipt of an annual bonus. Most mortgage deals have the flexibility to allow a certain amount of overpayment without any penalty.

2. Switch to a repayment mortgage
If your monthly budget allows simply ask the lender to switch your mortgage from interest only to repayment over the remaining mortgage term

3. Downsize
If you have no way of raising the funds to pay off the loan, you can sell your house and use the proceeds to clear your mortgage. The idea is that you will have enough surplus to also buy a new home mortgage free.

4. Tax fee pension lump sum
Use the tax fee lump sum payment from any pension arrangement. You can have access to a lump sum tax free from age 55 and this could be used to decrease your mortgage balance.

5. Sale of another property
Use the proceeds from the sale of an additional property you may own to repay the mortgage on your main residence

6. Sell your business
Your plan may be to sell your business and use the proceeds to repay your mortgage.

7. Inheritance
You may expect an inheritance and plan to use this to repay your mortgage balance.

8. Switch your mortgage to an equity release mortgage
This would typically be around the age of 65.

If you’re looking for the mortgage best suited to your requirements and would like some advice from the experts at IMC then speak to a member of our team today.

Return to news page
Gold star Gold star Gold star Gold star Gold star
"We really like the people and services provided at IMC. We've been using them for 6 years and they are incredibly helpful and attentive. Really Great!"

Richard Curen , Nov 2018

Independent review from Google
Gold star Gold star Gold star Gold star Gold star
"Totally recommend
Excellent company to work with, Jacqueline Elliot has dealt with numerous mortgage reviews for us and always reminds us in plenty of time to renew and make the proceeds as easy as possible. Can not recommend highly enough."

LeighM-33 , Dec 2018

Independent review from Yell
Gold star Gold star Gold star Gold star Gold star
"Andrew Francis has just completed a re mortgage for me on a property I own in London. I live in Bournemouth so good communication is really important. Andrew and Jennie have been excellent during what was a protracted transaction due to the additional requirements from the lender and their appointed conveyance solicitors. Despite unhelpful delays by the lender , I felt IMC were always on hand to negotiate on my behalf and bring the transaction to as swift a close as possible. My cousin is an IFA who I'd naturally automatically go to for advice and products but he recommended I stick with IMC as he couldn't better the deal and lenders they had available. I normally begrudge paying a fee to an IFA when I know they will also be paid by the lender but to be fair in this case, they earnt it and some! Thanks guys. I'm now £600 pm better off for the next five years ! 👍🏻😁 Chris Amey."

Christopher Amey , Oct 2019

Independent review from Facebook
Gold star Gold star Gold star Gold star Gold star
"Our mortgage adviser Andrew Francis is brilliant. When we first met him we were first time buyers with very limited knowledge about the process of buying a first home in the UK. However, Andrew guided us through the process with his vast knowledge and professionalism. We had to recently re- mortgage our flat, Andrew got in touch with us well in advance he presented us with the best options for us and made the whole procedure painless. Of course, we were a lot more relaxed this time around, as we already knew that we are in good hands. Thank you for your help, Andrew!"

Vyara Panayotova , Feb 2020

Independent review from Google