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Interest Only Mortgages

All The Information Covering Interest Only Mortgages

Wondering whether paying the interest charged on the mortgage each month could save you money? If you’re ready to learn more about how an interest only mortgage works and whether it’s possible to fix the rate, we’ve got you covered with our expert guides. An interest only mortgage might be right for you, but it’s always recommended to get advice from the experts who will be able to objectively weigh up the pros and cons of interest only vs a repayment mortgage based on your circumstances.

Posted On: May 18, 2022
Updated On: January 16, 2023

Interest-only Remortgage: How Does It Work?

If you are thinking of getting an interest-only mortgage, you may want to know whether it’s possible to remortgage. Likewise, if you already have an interest-only mortgage and don’t know what your options are when it comes to remortgaging, this guide is for you.

Can you remortgage an interest-only mortgage?

Yes – you can remortgage an interest-only mortgage.

What are your options?

Your options will typically include switching to a better interest rate or switching from interest-only terms to a repayment mortgage. The latter would mean you start to pay back the loan amount rather than just the interest.

How to get an interest-only remortgage?

To successfully secure an interest-only remortgage deal you will need to prove to the lender that you have a suitable repayment vehicle. A repayment vehicle or plan can include a stocks and shares ISA, an investment bond, pension schemes or the sale of a second property.

Bear in mind that if you’re using savings to settle the interest-only mortgage loan, only a select few lenders will provide a remortgage. If you want to try and remortgage by selling your current property, you will need equity of over £150,000. Again, only a few lenders will accept this as a repayment vehicle option.

With an endowment, the offer will usually correspond to the middle-projected figure from your endowment statement.

In short, widely accepted means of securing an interest-only remortgage include:

  • Sale of another property (most lenders)
  • Stocks and shares ISA (most lenders)
  • Investment bonds (most lenders)

Contact the team at Agentis to arrange your free initial consultation. With a wide range of lenders on our books, we can help match you with the right one to secure a remortgage plan that works for you. Speak to a Whole of Market mortgage broker today to find out more about Interest-Only Remortgages.

*You may have to pay an early repayment charge to your existing lender if you remortgage.