What Is an Interest-Only Mortgage?

An interest-only mortgage is a type of mortgage where you only make interest payments each month, as opposed to the interest and capital payments you would make on a repayment mortgage.

Making interest payments each month stops the mortgage balance from increasing but doesn’t go towards paying it off. You pay the full mortgage balance at the end of the mortgage term or when the property is sold.

The interest-only mortgage lender will require that you provide evidence of a suitable repayment vehicle – i.e. how you’re going to repay the mortgage at the end of the term.

Interest-Only Residential Mortgage

Most residential mortgages are repayment but some people find that residential interest-only mortgages suit them better, typically because the monthly payments are lower.

Would an Interest-Only Residential Mortgage Suit You?

You may find an interest-only residential mortgages useful if:

  • You have an alternative repayment strategy – e.g. you have equity in other properties that you could sell, or you have other investments
  • You’re planning on downsizing at the end of the mortgage term when it’s time to repay the mortgage – e.g. you intend on moving after your children have left home as you don’t want to maintain a big house
  • You want to remortgage onto an interest-only product because you want to reduce your monthly payments and you have a suitable repayment vehicle

Interest-Only Buy-to-Let Mortgage

Most buy-to-let mortgages are arranged on an interest-only basis. If this is the type of mortgage you’re after then see our buy-to-let mortgage page.

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We recommend you sort by True Cost Comparison find out more

We recommend you sort by True Cost Comparison

We suggest you use our ‘True Cost Comparison’ filter. This allows you to accurately understand how different mortgages compare by ordering results based on the total cost over a ‘deal period’, such as a two, or five-year fixed rate mortgage.

Some low interest rate deals might seem attractive, but if fees are higher they might not be the best value for you. When comparing mortgage deals our true cost comparison factors the lender fees over the length of the deal as well as your monthly mortgage payments.

For example, if your repayments are £2,000 per month on a two-year fixed-rate mortgage, plus £500 in lender fees, the total cost of the deal is £48,500.

We've found 1,008 remortgage deals that match your search

Sort by

Scheme ID 32611
Initial rate 1.14% then 5.69% (variable) ?
Monthly repayments £ 1,150 ?
Type/Duration Variable ?
Scheme fees £2,034 ?
Cost comparison £29,628 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 75%
Overpayments allowed? Yes
Early Repayment charges £199, plus (3% in year 1, 2% until 30-06-22) with a fee free allowance of 10%

Other info

Exit fees £199
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 3 months at 1.14%, then moving onto variable rate for 3 years at 4.44%, and then on a variable rate for 19 years and 9 months at 5.69%. This would require 27 payments of £1,149.73, followed by 36 payments of £1,609.95, and 237 payments of £1,785.19. The total amount payable would be £514,324 made up of the loan amount plus interest (£212,290) and fees (£2,233 which includes exit fees of £199). The overall cost for comparison is 4.65% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 17427
Initial rate 1.18% then 3.59% (variable) ?
Monthly repayments £ 1,155 ?
Type/Duration Variable ?
Scheme fees £35 ?
Cost comparison £27,761 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £80, plus (1% in years 1-2) of balance repaid

Other info

Exit fees £80
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a tracker rate for 2 years at 1.1800000000000002%, and then on a tracker rate for 23 years at 3.5900000000000003%. This would require 24 payments of £1,155.23 and 276 payments of £1,487.06. The total amount payable would be £438,269 made up of the loan amount plus interest (£138,234) and fees (£115 which includes exit fees of £80). The overall cost for comparison is 3.22% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 17437
Initial rate 1.18% then 3.59% (variable) ?
Monthly repayments £ 1,155 ?
Type/Duration Variable ?
Scheme fees £35 ?
Cost comparison £27,561 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £200

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £80, plus (1% in years 1-2) of balance repaid

Other info

Exit fees £80
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a tracker rate for 2 years at 1.1800000000000002%, and then on a tracker rate for 23 years at 3.5900000000000003%. This would require 24 payments of £1,155.23 and 276 payments of £1,487.06. The total amount payable would be £438,069 made up of the loan amount plus interest (£138,034) and fees (£115 which includes exit fees of £80). The overall cost for comparison is 3.22% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 17433
Initial rate 1.18% then 3.59% (variable) ?
Monthly repayments £ 1,155 ?
Type/Duration Variable ?
Scheme fees £35 ?
Cost comparison £27,761 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £80, plus (1% in years 1-2) of balance repaid

Other info

Exit fees £80
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a tracker rate for 2 years at 1.1800000000000002%, and then on a tracker rate for 23 years at 3.5900000000000003%. This would require 24 payments of £1,155.23 and 276 payments of £1,487.06. The total amount payable would be £438,269 made up of the loan amount plus interest (£138,234) and fees (£115 which includes exit fees of £80). The overall cost for comparison is 3.22% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 38131
Initial rate 1.19% then 3.59% (variable) ?
Monthly repayments £ 1,157 ?
Type/Duration Variable ?
Scheme fees £1,025 ?
Cost comparison £28,784 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges 2% until 30-06-21, 1% until 30-06-22

Other info

Exit fees £0
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 3 months at 1.19%, and then on a variable rate for 22 years and 9 months at 3.59%. This would require 27 payments of £1,156.61 and 273 payments of £1,483.55. The total amount payable would be £437,263 made up of the loan amount plus interest (£136,238) and fees (£1,025 which includes exit fees of £0). The overall cost for comparison is 3.20% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 63440
Initial rate 1.2% then 3.74% (variable) ?
Monthly repayments £ 1,158 ?
Type/Duration Variable ?
Scheme fees £999 ?
Cost comparison £28,041 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £750

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges 2% until 30-06-21, 1% until 30-06-22

Other info

Exit fees £0
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a tracker rate for 2 years and 3 months at 1.2000000000000002%, and then on a variable rate for 22 years and 9 months at 3.74%. This would require 27 payments of £1,157.98 and 273 payments of £1,505.73. The total amount payable would be £442,579 made up of the loan amount plus interest (£141,580) and fees (£999 which includes exit fees of £0). The overall cost for comparison is 3.33% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 63439
Initial rate 1.2% then 3.74% (variable) ?
Monthly repayments £ 1,158 ?
Type/Duration Variable ?
Scheme fees £999 ?
Cost comparison £28,041 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £750

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges 2% until 30-06-21, 1% until 30-06-22

Other info

Exit fees £0
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a tracker rate for 2 years and 3 months at 1.2000000000000002%, and then on a variable rate for 22 years and 9 months at 3.74%. This would require 27 payments of £1,157.98 and 273 payments of £1,505.73. The total amount payable would be £442,579 made up of the loan amount plus interest (£141,580) and fees (£999 which includes exit fees of £0). The overall cost for comparison is 3.33% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 5477
Initial rate 1.21% then 3.59% (variable) ?
Monthly repayments £ 1,159 ?
Type/Duration Variable ?
Scheme fees £1,034 ?
Cost comparison £28,609 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £250

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £80, plus (2% until 30-04-22) of balance repaid

Other info

Exit fees £80
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 1 month at 1.21%, and then on a tracker rate for 22 years and 11 months at 3.5900000000000003%. This would require 25 payments of £1,159.36 and 275 payments of £1,486.26. The total amount payable would be £438,570 made up of the loan amount plus interest (£137,536) and fees (£1,114 which includes exit fees of £80). The overall cost for comparison is 3.24% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 5479
Initial rate 1.21% then 3.59% (variable) ?
Monthly repayments £ 1,159 ?
Type/Duration Variable ?
Scheme fees £1,034 ?
Cost comparison £28,859 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £80, plus (2% until 30-04-22) of balance repaid

Other info

Exit fees £80
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 1 month at 1.21%, and then on a tracker rate for 22 years and 11 months at 3.5900000000000003%. This would require 25 payments of £1,159.36 and 275 payments of £1,486.26. The total amount payable would be £438,820 made up of the loan amount plus interest (£137,786) and fees (£1,114 which includes exit fees of £80). The overall cost for comparison is 3.24% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

Scheme ID 5764
Initial rate 1.21% then 3.59% (variable) ?
Monthly repayments £ 1,159 ?
Type/Duration Variable ?
Scheme fees £1,034 ?
Cost comparison £28,859 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £80, plus (2% until 30-04-22) of balance repaid

Other info

Exit fees £80
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 1 month at 1.21%, and then on a tracker rate for 22 years and 11 months at 3.5900000000000003%. This would require 25 payments of £1,159.36 and 275 payments of £1,486.26. The total amount payable would be £438,820 made up of the loan amount plus interest (£137,786) and fees (£1,114 which includes exit fees of £80). The overall cost for comparison is 3.24% APRC representative.

Speak to a mortgage expert on 0344 346 3672 or Enquire now

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How Can John Charcol Help You Find an Offset Mortgage?

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We work around your schedule to help you arrange a mortgage that suits your circumstances, no matter how complex.

Process for Buying a Home/Remortgaging

1. First Conversation with Adviser

First Conversation with Adviser

When you phone us, you can either arrange a phone appointment with your adviser or a face-to-face meeting – whatever suits you. Your adviser will ask you some questions then go away and find you the best deal for your circumstances and future needs. They’ll organise a follow up during which they’ll present you with what they’ve found.

2. Decision in Principle

Decision in Principle

Once you’re happy with their recommendation, they’ll go about securing your DIP (Decision in Principle) - which is basically a promise from the lender that they’ll loan you money on the condition that the information you’ve provided is correct and subject to a valuation of the property.

3. Offer on Property

Offer on Property/Remortgaging

After the lender has agreed your scenario, you’ll be in a position to make an offer on a property or move forward with the remortgaging.

4. Pre-Application and Submission

Pre-Application and Submission

Following the acceptance of your offer, we’ll send you some information which explains all the documents we need to submit to the lender. You’ll be assigned a client relationship manager who’ll check and submit certified copies of your documents; they’ll liaise with both you and the lender. Your adviser will then submit the fully packaged mortgage application.

5. Lender Underwriting and Valuation

Lender Underwriting and Valuation

The lender will underwrite your application; this basically means they’ll verify that the information you’ve provided is correct and review all your documents for themselves. They’ll also instruct a valuation for their purposes on the property you want to buy to make sure there are no significant problems with the property and that it’s worth the amount you want to borrow.

6. Mortgage Offer

Mortgage Offer

If the lender is happy with everything they’ve found, they’ll send you a mortgage offer. They’ll also send us a copy.

7. Conveyancing

Conveyancing

After you’ve accepted your mortgage offer, you’ll go through the legal part of the process, known as conveyancing. This is where the solicitors/conveyancers draw up contracts and organise the actual, legal purchase of the property/remortgaging. If buying, you’ll also need to arrange buildings insurance at this stage, making sure it’s in place from exchange.

8. Exchange and Completion

Exchange and Completion

If you’re buying a property, your conveyancer/solicitor will exchange contracts with the seller’s conveyancer/solicitor; it’s at this point that you would put down your deposit and be legally bound to the property. The purchase will complete when the money is transferred on an agreed-upon date. If you’re remortgaging, then your conveyancer/solicitor will set a date to draw down the funds and pay off any existing lender(s) once the mortgage offer’s released.

Additional Services

JC Legal

Not only do we arrange your mortgage, we can find you a conveyancer from our select panel of conveyancers and solicitors. Our recommendation will be based on your situation and timeframe to ensure your move goes according to plan. 

Insurance and Protection

We’re partners with Legal and General, so we can find you suitable buildings and contents insurance. Our inhouse team can also organise bespoke protection cover for you. What’s more, we don’t charge an arrangement fee for these services.

Concierge Service

Through our partnership with Just Move In, we can help you move into your new home, set up utilities, register for Council Tax and more with our Concierge Service. There’s no arrangement fee and you could save up to 8 hours of hassle.

Interest-Only Mortgage Criteria

Below we’ve listed some criteria you must meet to get an interest-only mortgage:

  • You must provide a minimum deposit of 25% for an interest-only mortgage
  • You must meet a minimum income requirement set by some lenders
  • You must be able to provide evidence of how you will repay the mortgage once the term is complete - e.g.
    • You’ll sell the property and use the funds from the sale to repay the mortgage
    • You’ll have access to funds by the end of the mortgage term
    • You have financial investments
    • You have equity in other properties that you intend to sell
Mortgage loan calculator
First applicant

First mortgage applicant

* £
£
Second applicant

Second mortgage applicant

* £
£
Result

As a guide, you could potentially borrow around:

 

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Interest-Only Mortgage FAQs

What Are the Main Benefits of an Interest-Only Mortgage?

The main benefit of an interest-only mortgage is obviously that you only make interest payments each month – not both interest and capital payments.

Who Are the Best Interest-Only Mortgage Providers?

A lot of lenders offer interest-only products. There’s no single, best provider as the best provider for you will depend on your unique situation.

Can You Get an Interest-Only Mortgage with a 90% Loan-to-Value?

For most lenders, the maximum LTV (loan-to-value) you can get on an interest-only mortgage is 75%. However a few lenders will allow LTVs up to 80%.

There’s also the other possibility of a part interest-only and part repayment mortgage. Some lenders will allow part interest-only and part repayment mortgages up to 85% LTV, but not 90%. For more information about this kind of specialist mortgage arrangement, speak to an adviser on: 0344 346 3672.

What Are Some Interest-Only Mortgage Rates?

You can compare the best interest-only mortgage rates currently on the market by using our free best buy tool.

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