Should you choose to overpay on your mortgage, you will want to make sure there are no early repayment charges. If not, it would be wise to overpay on your interest-only mortgage and start paying off the principal as soon as possible. If you suddenly come into money, such as from an inheritance, this is an especially good option.
Move to a repayment mortgage
This will be your best bet if the lump sum that you will be expected to pay at the end of your interest-only mortgage term becomes too daunting. Moving into a repayment mortgage will help you make payments on the principal sooner. If you do opt for this, however, you can expect your monthly payments to increase significantly. Just ensure you will still be able to meet those payments.
Extend the term of your mortgage
Let’s be clear here: if you extend the term of your mortgage, you are essentially attempting to buy yourself more time. It may, however, provide you with enough breathing room–i.e., time and money—to repay the balance. Note: In certain circumstances, such as surpassing a certain age, you may be ineligible to extend your mortgage.