The Fixer: interest-only mortgage

Have you been left out of pocket due to poor service or sharp practice? Do you have a money problem that won't go away?

It can seem impossible to get a fair result when you are battling a financial issue alone. But never fear! The AOL Money Fixer is here to help.

Dear Fixer,

About 15 years ago, my husband and I took out an interest-only mortgage on our house in Norwich. We invested in an endowment policy at the same time.

However, despite us making regular payments, the policy is nowhere near where it needs to be to pay the mortgage off in 10 years.

Our house has gone up in value since we bought it, but we hope to live here for the rest of our lives so selling the property to pay off the mortgage is a last resort.

What is the best way to ensure we can clear the amount borrowed at the end of our mortgage term? We are both 44 years old.

F Hawley, Norwich

Dear Mrs Hawley,

Firstly, well done for noticing this issue now. Many people on interest-only mortgages leave it until the last minute to take action to prevent a shortfall, which leaves them with far fewer options.

For someone in your position, ways to address the gap in your savings include switching to a repayment mortgage deal, which will help you to make big inroads into your debt, but will generally mean much bigger monthly payments.

You could also start making overpayments to reduce the amount owed. Most lenders will let you overpay by up to 10% of the mortgage amount per year, something that will reduce your interest liability and mean more of your monthly repayments go towards clearing the capital.

Other approaches include upping the amount you pay into your investment vehicle. However, all these options mean increasing your outgoings.

If this is not possible, you should look instead at extending your mortgage term so that you have more time to build up your savings, or can switch to a repayment mortgage without breaking the bank.

The Fixer

Whatever your financial problem, write to themoneyfixer@aim.com and The AOL Money Fixer will get on the case.