Can I sell my house if I have an interest only mortgage?

You can of course sell a property to repay an interest-only mortgage. This is more common among those who buy to let. If you are lucky, the property price will cover the whole loan amount with some left over – but if you are unlucky and run into negative equity, you may have to cover a shortfall.

What happens if you can’t pay off an interest-only mortgage?

As there are no payments to miss, you can’t face repossession. An RIOM, like most mortgages, carries compulsory repayments and the risk of repossession if they are missed. With compulsory payments, you also have to pass affordability checks.”

How can I get out of an interest-only mortgage?

What to do if you have an interest-only mortgage

  1. Switch your mortgage to a repayment mortgage. …
  2. Pay into an investment plan which can be used to pay off the capital at the end of the term. …
  3. Make lump sum overpayments or set up regular overpayments on your mortgage (if your lender allows this).

What happens when my interest-only mortgage comes to an end?

When an interest-only mortgage ends, you have to repay all the amount you borrowed. The money to repay it can come from three sources: … by getting a new mortgage; or. by selling your house.

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What are the disadvantages of an interest-only mortgage?

Disadvantages of an Interest-Only Mortgage

  • No Equity Growth. Interest-only mortgages today generally require large down payments so lenders have collateral against default. …
  • Home Values are Falling. …
  • Riskier loans with Higher Interest Rates. …
  • Variable Interest Increases.

How long can I have an interest-only mortgage?

Interest-only mortgages will come with an initial rate, often lasting between two and 10 years. After this, if you don’t remortgage, you’ll be put onto the lender’s standard variable rate, which is likely to be uncompetitive.

How long can you stay on interest-only mortgage?

Typically, an interest-only mortgage term tends to range between 5 and 25 years. There are some lenders that will consider longer terms, some spanning to 30, 35 and even 40 years in the right circumstances.

Can you still get interest-only mortgages 2021?

You can still get a residential interest-only mortgage, provided you meet certain eligibility criteria. Although the eligibility criteria for interest-only deals has tightened, many are still able to get one. … You also need to raise the required deposit and show the mortgage lender you can repay the loan.

Is it worth overpaying an interest-only mortgage?

Overpayment. On a repayment mortgage, paying extra on your mortgage helps you pay off the capital faster. But with an interest-only loan, overpaying will only reduce your future interest payments, not the loan itself, so this is unlikely to be a viable option for paying down your loan.