Yes, it is possible to change to an interest-only mortgage, usually by refinancing or switching your current loan, allowing you to lower monthly payments temporarily. This generally requires significant equity (often 20%+), a high credit score ( 700 + 7 0 0 + ), and a solid repayment plan for the principal.
You can switch between repayment options during the life of your loan, however there are limits on how long you can have an Interest Only period. Interest Only payments are not available within the last 5 years of your contracted loan term.
Interest only mortgages can offer flexibility and may align with your long-term financial strategy, but they are not suitable for everyone. Before considering a switch, it's essential to speak with a qualified mortgage adviser who can help assess your individual circumstances, future plans, and appetite for risk.
It might be more difficult to get accepted for an interest-only mortgage, as they're often viewed as higher risk. If you get to the end of your term and your repayment vehicle hasn't performed and doesn't cover the lump sum, you'll either need to sell your home or find another way to repay.
First, Interest-only mortgages often require higher credit scores and lower debt-to-income ratios for approval. Most lenders want a credit score of at least 680, though some non-QM lenders may go lower, even down to 500, if other factors (like assets or cash flow) make up for the risk.
What are the benefits of interest-only mortgages? Some people like the flexibility to be able to make lower payments initially, and pay more when their income or savings increase near the end of their mortgage term.
An interest-only mortgage payment on $200,000 depends on the interest rate, but at 5%, it's around $833/month (just interest), significantly lower than principal & interest payments, though you never build equity and pay more total interest over time, with later payments including principal. For example, at 3.25%, the initial payment is about $542/month for the interest-only period.
Disadvantages
You'll make interest only payments towards your mortgage for six months, with no impact on your credit score. You can cancel at any point, but you can only apply once.
Yes, but we only offer this via an appointment with one of our mortgage advisers (over the phone or by video call), not online. We do this to make sure it is right for your personal circumstances and that it's managed responsibly.
A home equity loan is a fixed-rate loan, similar to a personal loan, that provides a lump sum of cash out from your real estate. If you need additional money, you need to apply for another loan. These loans are in second position to your primary mortgage, and your existing mortgage terms do not change.
You'll need to be well-qualified to be approved for an interest-only mortgage. Banks generally look for borrowers who have: A credit score of 700 or more. A debt-to-income (DTI) ratio of 43 percent or less.
Make extra payments toward the principal
A large part of your monthly mortgage payments goes toward the principal and interest. One way to pay off your loan faster is by making extra payments to the principal only, says Forbes.
Yes, getting a 4% mortgage rate is difficult but possible in early 2026, often requiring strategies like assuming an existing low-rate loan (FHA/VA), using builder incentives (especially for new builds), buying discount points, securing a shorter-term loan (like 15-year), or having excellent credit/financials. While general 30-year rates are in the low 6% range, these methods can significantly lower your effective rate.
The 3-7-3 Rule in mortgages isn't a loan type but a federal timeline from the TILA-RESPA Integrated Disclosure (TRID) rule, ensuring borrower protection by mandating disclosures within 3 business days of application, a 7-business-day wait between the initial Loan Estimate and closing, and another 3-day wait if significant changes (like APR) occur, giving borrowers time to review costs before committing to a loan.
Tips to pay off mortgage early
The average age to pay off a mortgage in the U.S. is around 62, with many becoming mortgage-free in their early 60s, coinciding with or just after typical retirement age, though figures vary by source. While some financial experts suggest paying it off by 45 for aggressive investing, data shows a significant portion of homeowners, especially older ones (60+), are mortgage-free, but increasingly, older adults (60s, 70s, 80s) carry more mortgage debt than previous generations, according to Marketplace.