What happens when my mortgage ends?

If you live in the UK and you've recently paid off your mortgage, you might be wondering what happens next. We take a closer look at what's involved and your options after your final payment.

What happens when you pay off your mortgage in the UK?

If you are on a standard repayment mortgage, then it’s likely that you’ve paid off your mortgage at the end of your term that you agreed at the start – unless you made overpayments, fell behind or extended the term.

Once you’ve paid off your mortgage, your lender will remove its charge against your property and your mortgage provide will return your Title Deeds if you would like them to do so – though there may be a fee for this.

After that, there’s nothing else you need to do other than to ensure that you have an active buildings and contents insurance policy.

What if I’m on an interest-only mortgage?

Once you reach the end of your interest-only term mortgage, your debt will still be outstanding.

Throughout the life of your interest-only mortgage, you’ve only been paying off the interest on the loan, not the loan itself. Whilst this will have meant that your lower payments will have been lower than a repayment mortgage, it also means that you will have a large lump sum to pay when the term ends.

Your lender would have asked you to provide a repayment plan when you took out the mortgage, detailing how you plan on paying the lump sum when the time comes.

What are my options?

It’s your responsibility to stick to the repayment plan that you told the lender back when you took the mortgage out. Your options include putting money into a savings account, purchasing stocks and shares ISA or using money released from a pension. You may be able to switch to a repayment mortgage before your interest-only mortgage term finishes, but you need to speak to your lender about this.

I can’t afford to repay back the lump sum…

If this is the case then you may be able to remortgage, but it is likely to be difficult. To enquire about remortgaging, you need to tell your lender as soon as possible, even if your mortgage doesn’t end for a while. This might not be a viable solution so the only option left may be to sell your property and use the proceeds to repay the outstanding balance.

If you have owned your property for the average mortgage term of 25 years, then it’s likely that your property value has dramatically increased, and you will have a sizeable amount leftover to put towards a new home.

For advice on what happens when your mortgage ends, or if you need help with your interest-only mortgage, speak to one of our expert advisers who will be able to help you with the next steps.