Interest only mortgages – are they still available?

Can you still get interest only mortgages?

Interest only mortgages are popular because the monthly repayments are more affordable than repayment mortgages, but they are seldom offered by the big high street lenders any more.

That doesn’t mean you can’t get one. You just need to know where to look, and more importantly, how to apply. John Charcol is an expert in helping clients to secure interest only mortgages.

Talk to the interest only mortgage experts.

Call us on 0344 346 3672

or enquire now

Why are interest only mortgages so hard to find?

Interest only mortgages do exactly what they say – pay off just the interest. At the end of the mortgage, you need to have a way of paying off the capital loan for the property. If you don’t have this repayment vehicle in place, your home may be repossessed, so there is risk for both borrower and lender.  

Given the current low interest rates on savings and investments we are experiencing, lenders have stricter rules around who they will lend to on this basis and many simply won’t support this kind of mortgage any more.

How can John Charcol help with interest only mortgages?

As mortgage experts with years of experience, we have helped numerous clients to get interest only mortgages.

We know the smaller building societies and private banks that maybe prepared to offer interest only mortgages in the right circumstances and we’ll make a personal case for people we think are likely to be successful.

These are just some examples of the circumstances that might enable you to qualify for an interest only mortgage:

  • You are looking for a mortgage of 50% of the value of the property and will pay off the capital when you sell the property. This can be more or less than 50% in some circumstances, depending on availability)
  • You have a record of bonus-based income that you can use to pay off the capital in lump sums each year
  • You have a limited period in mind, for example three years until you finish paying off the school fees, when you will revert to a repayment mortgage
  • You are an older client who wishes to stay in a property for a defined period of time, with the value of the property to pay off the capital when you move on

To find out how we can help you to secure an interest only mortgage, call us on 0344 346 3672 or enquire now.

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Frequently asked questions

Why is an interest only mortgage less expensive?

Because as the name suggests, you are only paying off the interest each month. The critical issue is that you need to be able to show how you will pay the capital off at the end.

Do all lenders offer interest only mortgages?

Some high street lenders have either withdrawn these products or are reluctant to lend in these terms, but there are still lots of smaller building societies and banks that will lend on a case-by-case basis.

Can anyone get an interest only mortgage?

No. Most lenders perceive interest only mortgages as a more risky loan so have many criteria about who they will lend to. We take each one on a case-by-case basis.

What percentage loan to value can I apply for?

Typically you can fund up 50% of the property value with an interest only mortgage. 

Is there a set time limit?

Not a set limit, but interest only mortgages are always for a defined period linked to how you will be repaying the capital.

Why John Charcol?


Legal

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.

John Charcol is a trading name of John Charcol Limited and its Appointed Representatives. John Charcol Limited is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is 665649. Registered in England No. 9157892. Registered office address for John Charcol Limited is 5th Floor, Cutlers Exchange, 123 Houndsditch, London, EC3A 7BU. The FCA does not regulate some investment mortgage contracts. Calls may be recorded for training and monitoring.