Interest-only maturities are set to peak in the early 2030s, and late engagement is already narrowing options for older borrowers
Interest-only mortgages taken out in the 1990s and early 2000s are emerging as a growing pressure point for older homeowners, as borrowers reach the end of their terms with repayment plans that have fallen short.
For many, the original premise was straightforward: service the interest and rely on an endowment, ISA or pension lump sum to clear the capital at maturity.
Dan Osman (pictured top), head of age 50-plus mortgages at UK Moneyman, said that in practice, “returns underperformed, policies were cancelled, or investments simply failed to deliver the expected value at maturity”. That, he pointed out, has left some borrowers facing a shortfall at the very point when options narrow.
“Many say to us they knew the problem was on the horizon for them, but ‘life got in the way’,” Osman said. “The FCA established guidance more than a decade ago to ensure lenders treat interest-only customers fairly as their mortgages mature.”
Osman pointed to a renewed regulatory focus as the sector moves towards what the Financial Conduct Authority has described as a maturity bulge in the early 2030s. He said the FCA has convened an Industry Working Group to review existing guidance and support outcomes as more loans approach term end. In his account, the regulator’s research anticipates maturity peaks in 2031 and 2032, with “tens of thousands of mortgages reaching term without credible repayment plans.”
Against that backdrop, Osman said interest-only expiry is now a leading prompt for later-life borrowers considering equity release, particularly where affordability and age restrict mainstream choices.
He argued that timing is increasingly decisive. Some borrowers, he said, wait too long to engage — either with their lender or an adviser — reducing the scope for orderly solutions such as term extensions, partial repayments, retirement interest-only products, downsizing, or equity release where suitable. He also noted that lender discretion can be a factor when extensions are sought, and that this can depend on early engagement and individual circumstances.
“We have encountered situations where clients only approach us with weeks to go before maturity, leaving little time to arrange suitable alternatives,” Osman related. “A proactive approach can make all the difference.”
Osman’s broader message to brokers was that later-life cases should be assessed as part of a full options review, rather than treated as an automatic equity release conversation. He said that equity release can relieve immediate repayment pressure where income is insufficient to support a traditional repayment mortgage, but should sit alongside other routes in a structured review.
For brokers, he framed the challenge as both practical and reputational: ensuring clients start early, and ensuring advice pathways cover the full range of solutions as regulatory scrutiny rises. The scale of upcoming maturities, he suggested, makes interest-only risk a long-dated issue rather than a passing concern — one that will be shaped by how early borrowers act and how comprehensively brokers assess the available routes.
“The interest-only challenge is not going away for a few years yet, but with proactive advice and a comprehensive approach, brokers can turn a looming problem into a well-managed outcome that protects homeowners and preserves lifetime housing security for clients,” Osman said. “The referrals you will get from clients like this that you can help might just be the best leads you ever get.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
