A significant wave of UK interest-only mortgages taken out in the mid-2000s is now approaching maturity, and FCA research has repeatedly found a genuine gap between how confident borrowers feel and what the numbers actually show. This guide covers what genuinely counts as a repayment plan to lenders in 2026, the real options if a shortfall looks likely, and a specific forbearance measure most borrowers don't know exists.
Figures below reflect FCA guidance (FG13/7), the FCA Handbook's MCOB 11 rules, Mortgage Charter uptake data, and FCA-commissioned consumer research, current to mid-2026. This is general information, not financial advice; speak to your lender or a mortgage adviser about your specific circumstances as early as possible.
1. The confidence gap, in the FCA's own numbers
FCA-commissioned consumer research found that 82% of interest-only borrowers reported feeling confident about repaying their mortgage, yet 36% separately said they expected to have a shortfall at maturity. The research concluded that some interest-only borrowers may be over-estimating their actual ability to repay, a genuine, structural mismatch between sentiment and the underlying numbers, rather than a one-off finding. If you've never sat down and stress-tested your specific repayment vehicle against your actual mortgage balance and maturity date, this is precisely the gap worth closing before it closes on you.
2. Why 2027/28 specifically matters
The FCA's original 2013 research identified three peak periods for interest-only mortgage maturities in the UK: 2017/18, 2027/28, and 2032. The first wave has already passed; the second, 2027/28, is now imminent, meaning a substantial number of interest-only mortgages taken out in the mid-2000s housing boom are approaching maturity within the next year or two. If your mortgage falls into this cohort, the practical planning window is now, not closer to the maturity date itself.
3. What genuinely counts as a repayment plan in 2026
Where lenders are assessing interest-only applications or reviewing existing accounts in 2026, they no longer rely on assumed future property price growth alone, and vague statements of future intent are generally considered insufficient without documented evidence. Lenders now assess repayment plans across three dimensions: serviceability (can income comfortably support interest payments under stressed conditions), asset sufficiency (where investments are the vehicle, portfolio values are often discounted to account for volatility), and accessibility and timing (where a pension lump sum is the plan, lenders check the borrower's age at maturity against actual pension access rules, and require pension statements and projections as evidence). Where property sale is the intended route, lenders now check specifically whether the asset is unencumbered, genuinely marketable, and realistically disposable within the mortgage term.
4. The real options at maturity
- Repay in full from savings, investments, a pension lump sum, or the proceeds of a property sale.
- Sell and downsize, using the equity to clear the balance, though this genuinely reduces the funds available for the next property and often means real compromises elsewhere in retirement plans, not a cost-free fallback.
- Switch to a different mortgage product, such as a retirement interest-only mortgage or lifetime mortgage, provided this is demonstrably sustainable and affordable rather than simply deferring the same problem.
- Extend the term or agree a partial capital-and-interest repayment structure with the existing lender, where circumstances support it.
5. The 6-month forbearance lifeline most borrowers don't know about
Under rules introduced via the Mortgage Charter, and reflected in the FCA Handbook's MCOB 11.6 provisions, lenders can let a borrower make reduced capital payments, including switching to interest-only temporarily, for up to six months, or reverse a term extension within six months of it taking effect, without requiring a full new affordability assessment. This is a genuine, practical lifeline specifically for borrowers approaching difficulty, not just a theoretical rule: between July 2023 and March 2026, over 330,000 mortgages had payments reduced this way, and in the first quarter of 2026 alone around 20,000 borrowers used it. If a shortfall is looking likely, raising it with your lender early enough to use this option is considerably better than waiting until you're already in arrears.
6. What lenders are actually required to do
Under FCA guidance, lenders are expected to work with borrowers who can't fully repay the capital at maturity to find a solution suited to their individual circumstances, with repossession treated as a genuine last resort rather than a default response. In practice this has meant temporary concessions, term adjustments, and in some cases follow-on mortgage products, though take-up of dedicated follow-on products has reportedly remained relatively low. The clearest practical takeaway from the FCA's own repeated guidance on this topic: contact your lender as soon as you're unsure your repayment plan is genuinely sufficient, not once the maturity date is close.
7. Frequently asked questions
Is "I'll sell the house" a good enough interest-only repayment plan?
On its own, increasingly not. In 2026, lenders expect a repayment vehicle to be credible, measurable, and documented, and a vague statement of intent to downsize or sell later is generally considered insufficient. Where property sale is the intended route, lenders now assess it more conservatively, considering whether the asset is unencumbered, genuinely marketable, and realistically disposable within the mortgage term, rather than relying on assumed future price growth alone.
What happens if I can't repay my interest-only mortgage at the end of the term?
Lenders are required under FCA guidance to work with borrowers who can't fully repay the capital at maturity to find a solution suited to their individual circumstances, with repossession treated as a genuine last resort rather than a default response. Options commonly explored include a temporary switch to interest-only or reduced payments, a term extension, or moving to a different mortgage product such as a retirement interest-only mortgage.
Can I temporarily reduce my mortgage payments if I'm worried about a shortfall?
Yes. Under rules introduced via the Mortgage Charter, lenders can let a borrower make reduced capital payments, including paying interest only, for up to six months, or reverse a term extension within six months of it taking effect, without needing a full affordability reassessment. Over 330,000 mortgages had payments reduced this way between July 2023 and March 2026.
When are most UK interest-only mortgages due to mature?
The FCA's original research identified three peak maturity waves: 2017/18, 2027/28, and 2032. The second of these peaks, 2027/28, is now imminent, meaning a substantial number of interest-only mortgages taken out in the mid-2000s are approaching their maturity date within the next couple of years.
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