More than 715,000 interest only and part interest only mortgages were still active in the UK going into 2025, with large numbers due to mature through 2026, according to UK Finance.

If your interest-only mortgage is nearing the end of its term, the monthly payment is not the problem.

The problem is the balance still owed.

That is why so many homeowners feel fine right up until the lender letter lands and panic sets in.

Regulators have spent years pushing lenders to deal fairly with customers who cannot repay the capital at the end of an interest-only term, but the responsibility to repay the capital still sits with the borrower. The Financial Conduct Authority (FCA) has made this a clear focus within its work on fair treatment and consumer outcomes in the mortgage market.

UK Finance data shows the interest-only market has reduced over time, yet there are still large numbers of loans due to mature in the next few years, so this is not a rare problem.

The scale of the issue in real numbers

This is not a small corner of the market.

At the end of 2024, UK Finance reported around 541,000 pure interest-only homeowner mortgages still outstanding in the UK, plus a further 174,000 part interest-only loans, where part of the balance is on repayment terms.

That means more than 715,000 interest-only related agreements were still active going into 2025.

UK Finance also shows that while the overall stock has been shrinking for years, there are still large clusters of loans due to mature over the next few years, including through 2026, which is why this issue remains firmly on the radar of lenders and regulators.

What “end of term” really means

On an interest-only mortgage, you pay the interest each month, then repay the full amount you borrowed at the end using a separate plan like savings, investments, or another asset.

If there is no realistic repayment plan, the lender can demand the balance at the end of the term, so doing nothing is the worst strategy.

Why do people get caught out?

A lot of interest-only mortgages were taken years ago, with a plan that made sense at the time.

Then life happened.

Investments underperformed, pensions were raided, divorces happened, businesses changed, illness struck, or property values didn’t move the way people expected.

The Financial Conduct Authority has repeatedly emphasised the importance of early engagement because many borrowers delay addressing this until it becomes urgent.

What a broker actually does in this situation

A broker is not just there to find a rate.

A broker’s job is to map the problem properly, pressure test the options, then present a lender-ready case that matches your real-world position.

In the UK, mortgage intermediaries are a major part of how mortgages are arranged, and the Association of Mortgage Intermediaries positions advisers as a key part of consumer outcomes in a heavily intermediated market.

The main routes when an interest-only mortgage is ending

There is no one-size-fits-all answer, but these are the usual solutions a good broker will work through with you.

Remortgage and switch to repayment

This is the cleanest fix when affordability allows it.

You replace the interest-only mortgage with a repayment mortgage, so you start clearing the balance monthly.

A broker helps you choose a realistic term, check that the payment fits your budget, and avoid setting you up to fail later.

Part and part mortgage

Part of the loan stays interest-only; the rest converts to repayment.

This can be a stepping stone when full repayment payments are too high today, but you still want to start reducing the balance.

Extend the mortgage term

A term extension can reduce monthly payments and buy time to execute a proper repayment plan.

It is not a magic trick, because you may pay more interest overall, so it has to be weighed properly.

Repayment plan review and evidence

Some lenders will consider keeping interest only if there is a credible repayment vehicle and the evidence stacks up.

A broker will sanity check whether your plan is actually sufficient, then package the proof clearly for underwriting.

MoneyHelper explains repayment plans as the method used to clear the capital at the end of an interest only mortgage, which is the core concept lenders will focus on.

Downsizing or selling the property

Sometimes the most sensible plan is to sell, clear the mortgage, and move to a cheaper property.

A broker can help you time this around your term end date, early repayment charges, and onward purchase mortgage needs.

Later life options

For older borrowers, later-life lending may be part of the conversation, depending on age, income, and property type.

This can include retirement interest-only options in the wider later-life market, but it must be handled carefully because suitability is everything.

Speak to the lender early if repayment is not possible

If you know you cannot repay the capital at the end, you should contact your lender early and ask what support they can offer.

A broker can still be useful here because they can help you prepare your numbers and present a realistic plan rather than a stressed phone call.

The common traps that make things worse

• Ignoring it until the last six months.
• Assuming the lender will automatically extend the term.
• Assuming you can remortgage without checking affordability in today’s rules.
• Hoping the property value will solve it for you.

Taking random advice from online comments that do not know your income, outgoings, credit profile, or property details.

What you should pull together before speaking to a broker

• Your latest mortgage statement and the current balance.
• Your current term end date and whether any early repayment charge applies.
• Proof of income, plus a clear breakdown of monthly commitments and household spending.
• Your credit file, because surprises here can kill options fast.
• Any evidence of a repayment vehicle, like pensions, investments, savings, or a sale plan.

Frequently asked questions about interest only mortgages

Can I switch an interest-only mortgage to a repayment?

In many cases, yes, but it depends on your income, age, credit profile, and the lender’s current affordability rules. A broker can check this across multiple lenders rather than just your existing bank.

Will my lender extend my interest-only term automatically?

No. Some lenders may consider a term extension, but they will usually require a credible repayment plan and proof that the mortgage remains affordable.

What counts as an acceptable repayment plan?

Lenders typically look for pensions, investments, savings, or a clear sale or downsizing plan that reasonably covers the mortgage balance at the end of the term.

What happens if I cannot repay the balance at the end of the term?

You should contact your lender early to discuss support options. Leaving it to the final months can seriously limit what solutions are available. A mortgage adviser like ourselves can help navigate the process.

The simple takeaway

If your interest-only mortgage is ending, you are not shopping for a deal.

You are building an exit plan.

A broker adds value by finding the safest workable route, then getting it accepted in the real world of lender criteria.

Content correct at time of posting and may change.

Your home or property may be repossessed if repayments on a mortgage or loan secured on it are not made.

Sources*

UK Finance – Interest Only Mortgages Data and Market Updates

The Financial Conduct Authority – Mortgage Market and Consumer Outcomes Publications