Sarah Coles, head of personal finance at AJ Bell, said: “The gradual decline of interest-only was nailed on when the rules were tightened up and borrowers needed a credible repayment plan alongside their interest-only deal.
“It meant new interest-only mortgages switched from being mainstream: making up 39 per cent of mortgage sales in 2007, to a niche product making up 4.5 per cent in 2024.
“The good news is that people are paying these mortgages off faster than had been expected, and the bulk of these deals are now held by people who have loan-to-value of 50 per cent or less in their home, which means they’ll have more choices when they get to the end of the deal and need to repay.
“If you’re still on this kind of deal, your lender will have been in touch to check you can repay when the time comes – and will have offered support if you can’t.
“It’s worth keeping an eye on your plans though, so that if things change and it looks like there might be a shortfall when the loan matures, you and your lender have time to put a Plan B in place.”
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