Compare our best interest only mortgages

When you take out an interest-only mortgage, you only pay back the interest on the loan and not the loan itself until the very end of the mortgage term. This makes your monthly repayments smaller than traditional repayment mortgage monthly payments, but you will eventually have to repay the full loan amount at the end of the term. Find out more about interest-only mortgages in our guide below and use our comparison tool to discover the best interest-only mortgage rates.

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 1.97%. APRC 3.4%. Set-up fees £999
  • Barclays 2 Year Fixed mortgage

    Initial rate 2.17%. APRC 3.4%. Set-up fees £0
  • Barclays 2 Year Fixed mortgage

    Initial rate 2.27%. APRC 3.4%. Set-up fees £0
  • Barclays 2 Year Fixed mortgage

    Initial rate 2.29%. APRC 3.5%. Set-up fees £999
  • Barclays 2 Year Fixed mortgage

    Initial rate 2.54%. APRC 3.4%. Set-up fees £0
  • Barclays 2 Year Fixed mortgage

    Initial rate 2.55%. APRC 3.6%. Set-up fees £0
  • Santander 2 Year Fixed mortgage

    Initial rate 2.57%. APRC null%. Set-up fees £999
  • Monmouthshire Building Society 2 Year Variable mortgage

    Initial rate 2.59%. APRC 4.5%. Set-up fees £0
  • Barclays 5 Year Fixed mortgage

    Initial rate 2.65%. APRC 3.3%. Set-up fees £999
  • We've found 38 mortgage deals

    Barclays

    2 Year Fixed

    Initial rate

    1.97%

    until 30-11-2023

    APRC

    3.4%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £295.50

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    2.17%

    until 30-11-2023

    APRC

    3.4%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £325.50

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    2.27%

    until 30-11-2023

    APRC

    3.4%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £340.50

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    2.29%

    until 30-11-2023

    APRC

    3.5%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £343.50

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    2.54%

    until 30-11-2023

    APRC

    3.4%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £381.00

    for 24 months

    Barclays

    2 Year Fixed

    Initial rate

    2.55%

    until 30-11-2023

    APRC

    3.6%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £382.50

    for 24 months

    Santander

    2 Year Fixed

    Initial rate

    2.57%

    until 02-01-2024

    APRC

    null%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £385.50

    for 24 months

    Santander

    2 Year Fixed

    Initial rate

    2.57%

    until 02-01-2024

    APRC

    null%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £385.50

    for 24 months

    Monmouthshire Building Society

    2 Year Variable

    Initial rate

    2.59%

    APRC

    4.5%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £388.50

    for 24 months

    Barclays

    5 Year Fixed

    Initial rate

    2.65%

    until 30-11-2026

    APRC

    3.3%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £397.50

    for 60 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 is an interest only mortgage

    If you choose 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.

    In contrast, a repayment mortgage is a mortgage where the monthly payments go towards both the interest on the loan, and the loan capital amount. Your monthly payments are higher than interest-only payments, however, by the end of the mortgage term you will have paid off both the loan and the interest owed.

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

    What happens at the end of an interest only mortgage term?

    When your interest only mortgage term ends, you must repay the full amount you borrowed at the start. For this reason, you’ll need to be able to prove to mortgage lenders that you will be able to repay the full borrowed amount before they approve the mortgage. Lenders will look for evidence that you could pay off the mortgage with savings, other investments, or by selling the property itself.

    How to get an interest-only mortgage

    Repayment mortgages are more common and easier to get than interest only mortgages. The criteria to get an interest only mortgage are far tougher than a repayment mortgage and include a large deposit, as well as a clear repayment schedule for how you’ll repay the full loan at the end of the term. However, the exception is buy-to-let property. Nowadays, it’s common for interest-only mortgages to primarily be approved for landlords looking for buy-to-let property. Lenders often are more confident lending for buy-to-let property as the property could be sold at the end of the term to repay the loan if required.