Interest Only Mortgage Calculator

Interest-only mortgages are most commonly used for buy-to-let properties — where the rental income covers the interest payment and the capital is repaid from the eventual sale of the property. Some residential lenders also offer interest-only, typically for borrowers with high incomes and significant assets, subject to a credible repayment vehicle being in place.

A repayment vehicle is the plan you have for repaying the capital at the end of the mortgage term. Acceptable vehicles include an investment ISA, endowment policy, pension lump sum, or the proceeds from the sale of the property. Without a credible repayment vehicle, most lenders will not offer an interest-only mortgage.

Yes — the monthly payment for interest-only is always lower than for a repayment mortgage at the same rate and term. However, the total cost over the term is significantly higher because you are paying interest on the full balance throughout, and the capital remains outstanding at the end.

Yes — a remortgage is the ideal opportunity to switch your repayment method. We model the cost of switching and advise on whether a full capital repayment, part-and-part, or maintaining interest-only is the right approach for your financial situation.