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Extending interest-only mortgage term

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 6, 2023

Extending interest-only mortgage term

Some people find interest-only mortgages attractive because they are typically less expensive than capital repayment.

You still owe 100% at the end of the mortgage. You will need to plan how you’ll repay the loan. One option is to extend the term and delay the payment of the final amount.

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Extending the term on interest-only mortgages

This article will discuss why you might consider extending your loan versus other options. We also examine which mortgage lenders offer term extensions and their criteria. Finally, we will show you how your new monthly repayments might look if you extend.

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Is it possible to extend an interest-only term on a mortgage?

Yes. It is possible to extend your interest-only mortgage term with your current provider. Interest-only mortgages can be riskier than traditional ones. This makes it harder to apply for an extension. Lenders can grant extensions at their discretion.

It is essential to consider all options and do so as soon as possible. You may be limited in your options and have less flexibility if you delay applying for a mortgage extension.

An interest-only mortgage with a longer term allows you to raise additional funds to repay the loan. It does, however, mean that you will have to pay more interest on the debt.

A broker specialising in interest-only mortgage loans can assist you with your mortgage extension and help you make an informed decision.

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Maximum term length

The interest-only mortgage typically lasts between 5 and 25 years. You may be able to find lenders who will extend your loan to as long as 30 years, just like traditional mortgages. Some lenders may even be open to stretching out for 35-40 years.

However, longer terms are more common. If you have a robust application and meet all eligibility criteria, you may be able to extend your mortgage for a longer period.

Is it the same thing as remortgaging a mortgage term?

It’s not true. You can apply for an extension to your interest-only mortgage, but you must repay the entire loan in full.

Remortgaging occurs when you apply to another mortgage product. This is usually done because your fixed rate period has ended or because you want to raise capital by selling equity from the value of your property. Many applicants attempt to remortgage to get a lower interest rate.

A lower rate means your monthly payments will be lower, and you can save more money. You will have more equity at the end to repay the loan. This option could be an alternative to prolonging your mortgage term, depending on your situation and the rates you are eligible for.

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This is why you might want to extend an interest-only mortgage

In some cases, extending the term of your interest-only mortgage may be a good idea. You may prefer a different repayment plan in some cases.

If you have a viable repayment plan, it is possible to extend the term of your loan. You might be able to repay your mortgage in the end.

  • You could see an increase in your income during that time.
  • You might consider selling another property or the property you wish to extend your mortgage.
  • You may find that your expenses are reduced, so you have more money to repay the loan.

Before you extend the loan, it is essential to understand the consequences. There are some disadvantages to extending the loan.

  • Your mortgage is becoming more costly over time. Although you might feel some short-term financial benefits, your mortgage will cost you more.
  • Your home’s equity and value are being built slower. Interest-only mortgages are more dependent on the house price to increase your equity. You can switch to a repayment mortgage if you want to repay the principal amount each month, increasing your equity value.
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How to extend an interest-only mortgage

You can follow several simple steps if you still want to extend your interest-only mortgage.

Step 1: Evaluate your financial situation and check your current mortgage.

Examine the balance of your mortgage, your current rate and the date that you must repay the total amount. Determine if you can pay the loan off as planned. If not, what are your chances of getting it paid off? If you cannot repay the entire amount at the end of the term, determine if it is feasible to pay some off.

Step 2: Run a credit check

It’s a good idea to do a credit check to determine how strong your application for an extension is. Although bad credit on your credit reports won’t always make it difficult for lenders to extend your loan, it is a good idea to understand your financial situation better. Either you can take steps to erase any erroneous marks from your credit history, or at the very least, you will be able to know your credit score for your application.

Step 3: Talk to a specialist broker

It is highly recommended that you speak with an interest-only mortgage specialist at this point. They are experts in the market and know what extension providers want. They can tell you if your provider will accept your extension request or what you should do to increase your chances of approval. If they believe it is possible, they can help you get an extension at a lower rate.

After you have discussed your options with a mortgage broker, it’s a good idea for you to start implementing your plan as soon as possible.

Get in touch to arrange for an advisor who works with you to reach you for a complimentary, no-obligation chat.

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There are other options to extending interest-only term mortgages

There are alternatives if you believe an interest-only mortgage’s negatives are too harmful.


You can sell your house and buy a less expensive one to get rid of the equity you have in it. This equity can pay down some or all of your mortgage. While this may not be an option many people want, it could prevent your home from repossessing if there is no other way to pay the outstanding loan. When deciding whether or not to move, you should consider the associated costs, such as stamp duty.


You can remortgage your home with another lender if you don’t want to sell it. The lower rate may result in lower repayments, allowing you to start overpaying your mortgage and reducing the final balance. You could also save the cash and pay it off in one lump sum after the term.

Equity release

Although it is more difficult to extend your mortgage term, you may be eligible for an equity transfer scheme. These products let you free up equity in your home while you still live there. They don’t require monthly payments. The loan can be repaid when the borrower dies or moves into full-time care, allowing you to sell your home.

Retirement interest-only mortgage

You can switch to a retirement-interest-only mortgage if you are eligible. This will allow you to make fixed-rate mortgage repayments. There is no repayment deadline. You can repay the outstanding loan balance when you die or move into full-time residential care.

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How your new repayments will look

If your rate has changed, or you have switched to principal repayment products, extending the term of your loan could affect your monthly payment. The calculator can help you estimate how much your new monthly payments will be.

Although the calculator defaults to repayment by default, once you have entered your data, you can change the tool to interest to compare the results.

What lenders offer term extensions

Lenders can extend mortgage terms at their discretion. Your current provider may be able to consider your application if your existing interest-only mortgage is being developed. While some lenders will extend your mortgage for the longest time, others may extend it for a shorter time. Others may not be interested at all.

Penrith Building Society, for example, offers an interest-only mortgage with a maximum term of 35 years. There is no age limit and no full length. They may be willing to extend your mortgage term if you have one.

Other lenders offer interest-only mortgages, with their maximum term lengths as well as age limits:

  • Newbury Building Society (full term length: 35 Years). Full age at term’s end: 90 years
  • Live longer (full term length: 50 Years). Full age at term’s end: None
  • The Loughborough Building Society (maximum term length: 35 Years). The maximum period at term’s end: None
  • Together (maximum term length: 40 Years). Maximum age at term’s end: 85 years
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Criteria for eligibility

Different lenders will have additional requirements for you to be eligible to extend your interest-only mortgage loan. They will most likely be:

Ratios of loan-to-value (LTV).

Your application will be stronger if you have more equity in your home over the years, perhaps due to an appreciation of the house’s value. You will be considered less risk if you have more equity. This is because you can pay the loan off by selling your home.

Final repayment and affordability

Your current provider will want to ensure that you can repay the extension payments even if you have been approved for a mortgage. They will also consider your income source.

They will then assess your ability to repay the loan by the end of the new term. Lenders want to know if you have a plan to pay off the debt at the end of the extended period. This could include selling another property, taking a lump amount from your pension, using other investments, or selling other assets.

Credit history

Bad credit scores are riskier than people with good credit. You may find that providers are less likely to approve your application for a term extension if you have a lower credit score.


You are less likely to get a mortgage extension if your age is greater, especially if you have an interest-only product. If other parts of your application are strong enough to be approved by specific lenders, age might not matter. Usually, lenders have an age limit for their products. However, some go up to 85.

Talk to an interest-only mortgage specialist about extensions

While it may seem like the right thing to do for your situation, there are many situations where it might not be. Your provider may not automatically approve your extension request.

Talking to an interest-only mortgage specialist is highly beneficial. They will inform you about your options, whether extending your mortgage term is a good idea, and if it’s possible for you to lower your current rate.

No-obligation broker matching service connects you with an expert with extensive market knowledge. This will ensure that you receive the best advice. For a no-obligation chat, contact us today or send an enquiry.

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