Interest Only Mortgages

You would pay off the whole of the capital sum over the twenty years.

Sale of the property. The lender has first call on the proceeds of the sale as you still owe all of the capital. You might be left with a profit or you might find the lender chasing you for any shortfall.

There is no "5 years worth of capital" as such.

Think of the switch as taking out a completely new repayment mortgage, unrelated to the first, which instantly pays off the entire capital due on the interest-only one.

The rate at which the capital on this new mortgage will be paid off will depend on how long a term the new loan is being set up for. It could be a whole new 25 year term (meaning it would all be paid off

If you had spare capital sitting around at the time of switching, you could choose to put some of it towards paying off some of the loan, meaning that you'd need to borrow less on the new loan.

One thing you could do (if this is where your "5 years worth of capital" idea comes from) is work out how much capital you would have paid off if you had had a 25 year repayment mortgage from the outset, and pay off that amount at time of switching. But there's no particularly good reason why you should choose to pay down exactly that amount. It would merely mean that if you then went for a 20 year term for the rest, then your monthly payments will be exactly the same as they would have been for a 25 year term of the original amount, provided the interest rates were the same.

That would depend on various circumstances, such as the size of your endowment shortfall (if you have an endowment), how much equity you have, and your ability to continue making payments. A term extension might not be out of the question.

If you have decent equity it would be better to sell up on your terms than let it come to a repossession.

Brilliant, thank you Anthony and Ronald for those answers!