Compare our best interest only mortgages

With an interest only mortgage, you only pay back the interest (not the loan) until the very end of the mortgage term. The monthly repayments are smaller than traditional repayment mortgages, but not everyone can get one. Find the best interest only mortgage with our comparison tool. Explore our interest only mortgage guide to find out more.

Mortgage type

Property price

£

Mortgage amount

£

Mortgage term

years

Initial rate type

Deal length

Repayment type

Our best interest only mortgages

  • Barclays 2 Year Fixed mortgage

    Initial rate 1.87%. APRC 3.9%. Set-up fees £999
  • Monmouthshire Building Society 2 Year Variable mortgage

    Initial rate 2.04%. APRC 4.9%. Set-up fees £999
  • Barclays 3 Year Fixed mortgage

    Initial rate 2.09%. APRC 3.8%. Set-up fees £999
  • Barclays 2 Year Fixed mortgage

    Initial rate 2.18%. APRC 3.9%. Set-up fees £0
  • We've found 69 mortgage deals

    Barclays

    2 Year Fixed

    Initial rate

    1.87%

    until 31-10-2021

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £280.50

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    1.87%

    until 31-10-2021

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £280.50

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    1.87%

    until 31-10-2021

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £280.50

    for 24 months

    Monmouthshire Building Society

    2 Year Variable

    Initial rate

    2.04%

    APRC

    4.9%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £306.00

    for 24 months

    Barclays

    3 Year Fixed

    Initial rate

    2.09%

    until 31-10-2022

    APRC

    3.8%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £313.50

    for 36 months

    Barclays

    3 Year Fixed

    Initial rate

    2.09%

    until 31-10-2022

    APRC

    3.8%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £313.50

    for 36 months

    Barclays

    3 Year Fixed

    Initial rate

    2.09%

    until 31-10-2022

    APRC

    3.8%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £313.50

    for 36 months

    Barclays

    2 Year Fixed

    Initial rate

    2.18%

    until 31-10-2021

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £327.00

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    2.18%

    until 31-10-2021

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £327.00

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    2.18%

    until 31-10-2021

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £327.00

    for 24 months

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    Representative example:

    If you borrowed £190,000 payable over 25 years, with an initial fixed-rate for three years at 5.89%, your monthly payments would be £932.58 for 36 months. This would then revert to a standard variable rate (SVR) of 5.19% for the remaining 22 years, costing £821.75 per month for 264 months. Overall cost for comparison is 5.5% APRC representative. The total amount payable over the full term would be £440,515, including interest of £250,515 and a lump sum of £190,000.

    Your home may be repossessed if you do not keep up repayments on your mortgage.

    What are interest only mortgages?

    With an interest only mortgage you just pay back the interest on the money you borrowed. This means your monthly payments are much smaller than with a repayment mortgage. But you end up paying more interest over the full mortgage term.

    When your mortgage term ends on an interest only mortgage, you repay the full mortgage loan you borrowed at the start.

    You need to be able to prove to mortgage lenders you can do this. You could pay off the mortgage with savings, other investments or the sale of the property itself.

    Compare our best interest only mortgages

    Repayment mortgages are more common and easier to get. The monthly repayments go towards the interest and some of the principal debt. This means your payments are higher than with an interest only mortgage. But, by the end of the mortgage term, you should have paid it all off and own your home outright.

    For an interest only £200,000 mortgage over 25 years with an interest rate of 2.5%, your monthly repayments would be just £417. With a normal repayment mortgage with the same term and rates, your monthly repayments would be £897.

    Use our tool as an interest only mortgage calculator to see how much you'd have to repay each month

    Interest only mortgage repayments

    When it comes to interest only vs. repayment mortgages, interest only mortgages have lower monthly repayments. The catch is the remaining lump sum you have to pay at the end.

    Because of this, an interest only mortgage is often more expensive in the long run because you’re not reducing the principal debt. You're paying interest on the same amount of debt every month.

    So on that £200,000 interest only mortgage with an interest rate of 2.5%, the total amount you would have repaid at the end of the 25 year term is £325,000.

    But for the same mortgage on a repayment mortgage basis, you'd have paid £269,000. This is because you're reducing the principal debt with each payment. By the end, most of your money goes towards paying off the capital rather than the interest.

    The key to interest only mortgages is to have a clear way of paying off that final debt. The lender will want to know your repayment method before it offers you an interest only mortgage.

    The simplest route is to sell the property at the end of the mortgage term and use that to pay back the lender. Many buy to let mortgages - where you buy a property specifically to rent it out - are settled in this way. In fact, buy to let are often interest only mortgages.

    To avoid having to sell the property, you could use a different repayment vehicle. This might be savings, a pension withdrawal, or another investment fund. Really, any legitimate lump sum that can clear the full debt amount.

    Read more about buy to let mortgages

    Retirement interest only mortgages

    There has been a new wave of interest only mortgages for those in retirement. They are work in almost exactly the same way as other interest only mortgages.

    The differences are:

    • The loan is paid off when you die, sell the house or go into care
    • You do not have to prove that you can repay the capital, though you must show you can meet the monthly repayments.

    Retirement Interest only mortgages are popular because your regular income will most likely be lower than when you were employed. So, it's useful to have lower monthly repayments. How much you can borrow, and the rates you're eligible for depend on your retirement income.

    Problems may arise for your descendants though. The property (which may be the sum-total of their inheritance) will most likely need to be sold to pay off the debt.

    Learn more about the different types of mortgage
    How much money do I need to retire?

    Interest only mortgage FAQs

    Can I use an interest only mortgage calculator?

    You can use our mortgage repayment calculator as an interest only calculator. Choose the repayment type as 'interest only' to see how much you could repay each month. It is very difficult to get an interest only mortgage as a first time buyer.

    Can I overpay on an interest only mortgage?

    Technically you can overpay on an interest only mortgage. But before you do, talk to your lender to discuss your options. If you can afford to overpay, consider getting a repayment mortgage so you can gradually reduce the capital.

    Can I get a part and part mortgage?

    Yes, you can get a mortgage that is part repayment and part interest only. You will pay off some of the loan principal each month, but there will still be an amount that must be settled at the end of the mortgage.

    Can I remortgage to an interest only mortgage?

    Yes. But you will need to show you have a viable way to pay off the principal amount at the end of the mortgage term.

    Can I switch between repayment and interest only mortgages?

    Yes, though there could be fees and other charges. You may find it difficult to switch from a repayment to an interest only mortgage because it is seen as riskier. Speak to your mortgage lender to find out more.

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    Last updated: 10 July, 2019

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