Three options, and people confuse them constantly
Temporary interest-only. You pay only the interest and the balance stops falling. Six months, one-off, under the Mortgage Charter. No affordability check, no adverse impact on your credit file. The capital you did not repay still has to be repaid, so payments afterwards go above their original level.
Term extension. The same balance spread over more years. No preset limit, no affordability check at the point of taking it, no adverse credit impact. It is the most powerful lever here and the most expensive.
Payment deferral. Payments pause entirely and arrears normally accrue. Lender's discretion, and it can be recorded on your credit file. Ask before you agree to anything.
Commitments 7 and 8 of the Mortgage Charter cover the first two, and commitment 8 lets you revert to your original terms within six months. Underneath it, MCOB 11.6.3R exempts from the affordability assessment any variation that temporarily reduces capital repayments for up to six months, the reversal of a term extension within six months, and forbearance for payment difficulties.
The shape of the trade
Large, immediate relief. Very large, distant cost. On £200,000 at 5.84%, going from 20 years to 30 saves about £235 a month and costs about £85,000 in extra interest. The published ranges agree: a six-month temporary extension costs £220 to £433; a permanent five-year extension costs £7,500 to £35,700 or more.
Two constraints that bite
A term extension cannot normally run beyond your expected retirement age, which is the constraint that catches borrowers in their fifties. And reversing an extension within six months needs no affordability check, while reversing one after six months does. The six-month mark is a real deadline.
Part-and-part
You can put some of the balance on interest-only and repay the rest, which lands between the two. A lender may only agree to interest-only where you have a clearly understood and credible repayment strategy — MCOB 11.6.41R. Speculative strategies are not permitted, and "I will sell the house" usually is not enough on its own.
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