Mortgages
Interest Only Mortgages
Looking for information on interest-only mortgages? Read our insight to learn what an interest-only mortgage is, how it works, and the pros and cons of this type of mortgage.
Free tool
Mortgage Repayment Calculator
See what a mortgage could cost each month, and how much interest you would pay overall, for any amount, rate and term.
Monthly payment£1,390
£166,874 interestTotal repaid £416,874 over the full term.
An illustration only. Your actual payments depend on the lender, product and how rates change over the term.
Making sense of the numbers
On a repayment mortgage, each monthly payment covers the interest plus a slice of the loan itself, so the balance falls to zero by the end of the term. On an interest-only mortgage you pay just the interest, so payments are lower, but the full amount still has to be repaid at the end.
Two things that move the payment most
- The interest rate. Even a small change makes a real difference over 25 years, which is why the rate you are offered matters so much. Your loan-to-value is a big driver of the rate you get.
- The term. A longer term lowers the monthly payment but increases the total interest you pay.
Want to know how much you could borrow in the first place? Try the affordability calculator.
Keep reading
Related guides
Mortgages
What is a Tracker Mortgage?
A tracker mortgage adjusts its interest rate in line with a market benchmark, such as the Bank of England base rate. But, that won't be right for everyone. We explain why...
Mortgages
How can loan to value impact mortgage repayments
Understanding how Loan to Value works, and how Loan to Value brackets can impact your mortgage repayments can give you an upper hand over the banks when you apply for your Mortgage.