If you currently have an interest only mortgage your monthly mortgage payments are only paying the interest due on the amount you borrowed. This means the original amount you borrowed will become due when your mortgage term comes to an end. For example, if you originally borrowed £150,000 over a 25-year term, on an interest only basis, and you pay all your contractual monthly payments on time and in full, you will still owe £150,000 at the end of the 25 year mortgage term.
With an interest only mortgage it is your responsibly to have a repayment plan in place that will help you to pay the original amount borrowed at the end of your mortgage term.
If choose to switch your mortgage to a capital repayment mortgage, your monthly payments will increase so they include the interest payment and an amount towards the capital (the original amount borrowed). Therefore, if you make all your contractual monthly payments on time and in full, your mortgage will be repaid when your term comes to an end.
Before making any changes to your mortgage we would always recommend that you seek independent financial advice so you can be sure that this is the best option for your circumstances. We do not have the relevant permissions from the Financial Conduct Authority (FCA) to give advice, so our team will not be able to help you make a decision, they will only be able to execute your instructions.
If you’ve got some questions about the application process, have a look at our frequently asked questions and see if they can help.
Frequently asked questions