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Interest-Only Mortgages

An interest-only mortgage could provide greater flexibility for the right type of client by lowering monthly mortgage repayments.

Compare the best interest-only mortgage deals and rates.
Personal consultation to identify the right mortgage option for you.
Learn about switching to a residential interest-only mortgage.

Speak with a mortgage broker now | Call us on 0800 980 8777 or

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 mortgage?

An interest-only mortgage is a type of mortgage where you only pay the interest on the loan for every monthly mortgage repayment. As you will not be repaying the capital sum each month, you will need to repay the capital amount in full at the end of the term. This is what your ‘repayment-vehicle’ is for.

In contrast, a repayment mortgage is where you repay both the interest and capital amount you borrowed.

Expert mortgage advice with Private Finance

Interest-only mortgages can be an attractive option for homebuyers or property investors looking for flexibility in lowering their monthly repayments. However, interest-only mortgages are not suitable for everyone. Our brokers will assess your unique circumstances and inform you whether this is an appropriate solution for you.

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

Strong lender relationships

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

Experience and Expertise

We believe in mortgage advice that considers not just your personal and financial situation, but also the wider financial environment. To achieve this, we partner with wealth advisers and accountants to draw on their expertise when required, to tailor advice that aligns with your present and future needs.

Rated 4.97 out of 5 on review.co.uk

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, keeping you updated along the way and when is most convenient for you.

What are the advantages and disadvantages of an interest-only mortgage?

Interest-only mortgages can offer certain advantages and disadvantages. It’s important for borrowers to carefully evaluate their financial situation, long-term goals, and risk tolerance before considering an interest-only mortgage. Consulting with a qualified mortgage professional or financial advisor can provide valuable insights and help make an informed decision.

Advantages

Lower monthly payments: The monthly payments are lower when compared to a traditional mortgage as only the interest is paid.
Flexibility for investment: By paying only the interest, borrowers could have the opportunity to invest the savings or allocate the funds toward other financial goals.

Disadvantages

Mortgage balance will not reduce: As only the interest is paid on the loan, there is no progress made toward paying down the principal balance unless you use the overpayment facility.
Higher overall cost: Since no payments are made towards the principal balance, the total cost of the mortgage over its lifetime will be higher compared to a traditional mortgage. The borrower pays interest on the entire principal amount for a longer period.
Suitable repayment vehicle: As no payments are made towards the capital sum each month, you will need to repay the capital amount in full at the end of the term.
Limited availability: Interest-only mortgages are not available to everyone and lenders can have stricter eligibility requirements. You will either need to have a large deposit, be classed as a high earner, or have significant savings/assets in the background.

Discover if an interest-only mortgage is right for you

Call us on 0800 980 8777 or Arrange a call back or

Interest-Only FAQs

How do I repay the capital sum at the end of my mortgage term?
You will need to repay the capital borrowed at the end of the mortgage term and therefore will need a suitable ‘repayment vehicle’ in place. These can include one or more of the following:
- Savings – you could save towards the final lump sum payment through ISAs or other types of saving account.
- Stocks and shares.
- Other assets and properties can be used in the future to pay off your mortgage.
- Pensions can be use by withdrawing from one or more pensions at the end of the term.
Do lenders check repayment vehicles are in place?
Yes. Lenders will want to see evidence that you have a suitable repayment vehicle set up. You’ll need to show your lender that you have a credible repayment strategy in place to pay off the balance at the end of the mortgage term.
Different lenders have different requirement, and we can help with this.
What is a part & part mortgage?
A Part & Part mortgage is where your mortgage is split. One part will be interest only and the other repayment (capital and interest). This means you will repay some of your capital each month, but not all of it, and you will still need a repayment vehicle to pay the remaining capital at the end of the term.
Who can apply for an interest-only mortgage?
In theory, anyone can apply for an interest-only mortgage. However, in reality you will need to have a big deposit, be a higher earner and/or have a large pot of savings from somewhere.