Search Private Finance

Interest-Only Remortgage

An interest-only remortgage could provide greater flexibility for the right person by lowering monthly mortgage repayments.

Compare the best interest-only remortgage rates
We use 175+ lenders across the whole market
Bespoke and exclusive deals from strong lender relationships

What our clients say

“Private Finance provided excellent service securing a remortgage for my property even though it was not a straight forward case. They always kept me updated and was on hand to help and deal with any issues arising. Would definitely recommend Private Finance for their services, offering guidance and support throughout the whole process.”

“Private Finance worked incredibly hard to secure our business re-mortgage. They were always calm, professional, polite and ready to wade in on our behalf when things stalled. We would happily recommend them, and look forward to maintaining our relationship. Many thanks!”

“Outstanding services in our mortgage search, during a weird environment of fast-changing market conditions. The team has always been super responsive, very clear in their replies to all questions we had along the process, and managed to get us extremely good deals on various mortgage products. I can only strongly recommend them for your mortgage search!!”

“Private Finance provided excellent service securing a remortgage for my property even though it was not a straightforward case. They always kept me updated and was on hand to help and deal with any issues arising. Would definitely recommend Private Finance for their services, offering guidance and support throughout the whole process.”

“Professional and proactive advice and service – secured me an amazing rate on my mortgage. The team were great with their communication and I always felt confident that things were progressing – completely took away any anxiety from a stressful process!”

“Private Finance have been fantastic in finding me the right provider and the right price. We have used them twice now, and both times the communication was fantastic, the options explained, and the rest of the paperwork dealt with. Would highly recommend.”

What is an interest-only remortgage?

Are you approaching the end of your current mortgage deal and considering switching from a repayment to an interest-only repayment plan?
An interest-only remortgage involves switching your current mortgage to a new interest-only deal, usually with a different lender but still using the same property as collateral. Moving from a repayment mortgage to an interest-only mortgage can provide greater flexibility by lowering your monthly payments, making it an attractive option for the right individual. This could be particularly advantageous if current interest rates are significantly higher than when you took out your previous mortgage.
While remortgaging to interest-only can be attractive for both homebuyers and investors, it’s crucial to understand the risks and costs involved. This type of mortgage isn’t suitable for everyone. Our brokers will assess your circumstances to help you determine if this is the right solution for you.

Please be aware that your home may be repossessed if you do not keep up repayments on your mortgage.

Ready to discuss your remortgage options?

Speak with an expert now or Arrange a call back or

Why remortgage to interest-only?

Currently, average mortgage rates are higher than what most people have been used to and it is likely that when your current deal expires, your mortgage rate will go up. Moving to an interest-only mortgage repayment plan can help reduce your monthly mortgage payments and provide greater financial flexibility.

It is important to get in touch with a mortgage consultant at least six months before your current deal ends. This is to ensure you have enough time to arrange your new mortgage and not risk closing any doors by leaving this too late. Staying with an existing lender could mean being put on a high standard variable rate.

At Private Finance, we can help you understand your mortgage options before your current deal expires and find a new mortgage rate early.

Interest-only mortgages: Advantages and disadvantages

Advantages

Lower monthly payments: Since only the interest is paid, the monthly payments are lower than a repayment mortgage.
Flexibility for investment: Smaller monthly repayments allow for greater flexibility to allocate the funds toward other financial goals. Most lenders offer a 10% overpayment allowance each year, so often interest-only borrowers also have the flexibility to eat away at the debt should they wish to.

Disadvantages

Mortgage balance will not reduce: Only the interest is paid unless an overpayment facility is used. The capital amount is repaid at the end of the term.
Higher overall cost: The borrower pays interest on the entire principal amount remaining on the mortgage for a longer period resulting in a higher lifetime cost.
Limited availability: Some lenders will have certain minimum entry requirements in terms of income and require a satisfactory repayment vehicle in place.

Interest-only remortgage experts

With 25 years of experience arranging mortgages of every kind, our consultants have deep expertise in assisting clients when remortgaging to interest-only mortgage deals.

Here are some of the reasons that our clients trust us with their mortgage needs:

Relationships

We’re an independent, whole-of-market broker using over 175 different lenders, with strong ties to high-street lenders, private banks, and specialist providers. That means we have access to exclusive rates and can arrange bespoke solutions – we’re optimally positioned to find the right mortgage solution for you.

Expertise

We believe in mortgage advice that considers not just your personal and financial situation, but also the wider financial landscape. To accomplish this, we partner with wealth advisers and accountants to draw on their expertise when needed, tailoring advice to align with your present and future needs.

Service

With an average rating of 4.97/5 from more than 2,000 reviews, we offer an outstanding client experience with simple mortgage processes. Save time researching and comparing mortgages. We do all the heavy lifting and will keep you updated along the way, when is most convenient for you.

Interest-only remortgage FAQs

What is an interest-only mortgage?
An interest-only mortgage is a type of loan where your monthly payments cover only the interest on the loan. Since you’re not paying down the principal each month, you’ll need to repay the entire principal amount at the end of the loan term. This is what your ‘repayment vehicle’ is intended for.
In comparison, a repayment mortgage requires you to repay both the interest and capital amount that you borrowed each month.
What costs should I consider when remortgaging?
While there may be a short-term financial cost, remortgaging could result in long-term savings. Likewise, switching to a lower rate than your current mortgage may not always be cheaper, especially in the short term when accounting for all the additional costs.
It is important to consider the valuation and lender fees when remortgaging. Additionally, if you leave your current mortgage deal early, be mindful of potential early repayment charges.
Can I remortgage early?
It is possible to remortgage in advance of your current mortgage deal expiring, however, you may be subject to ERCs (early repayment charges). It’s important to check with your lender since these charges can vary depending on your mortgage agreement.
It’s also crucial to consider the overall costs and benefits of remortgaging early, including any potential savings in interest rates versus the cost of ERCs and other fees associated with remortgaging.
When should I remortgage?
You should start looking for a new mortgage deal at least six months before your current mortgage deal ends.
You can remortgage at any point you feel you would benefit from switching to a new lender or changing your mortgage. However, there may be early repayment charges if you leave your current mortgage early.
How long does remortgaging take?
Typically, remortgaging takes between 4 to 8 weeks on average, however this will depend on your individual circumstances and the conveyancing process as a third party involvement. We have a selection of trusted professionals we can recommend in this area. All partners we recommend to you are met with the high premium level service we offer.
Will I need a solicitor to remortgage?
A solicitor will be required to remortgage for the conveyancing process, however as there is no exchange of contracts or change of ownership, this is a much simpler process than buying a house.