Interest-Only Mortgage Calculator
Work out the monthly cost of an interest-only mortgage — and how much you'll still owe at the end of the term.
A £0 interest-only mortgage at 0% costs £0 per month — £0 in total interest over 0 years, with the full £0 still owed at the end.
Interest-only vs repayment
Interest-only
- Monthly: loan × rate ÷ 12
- Balance: unchanged
- Needs a repayment vehicle
- Common for BTL, over-55s, high-net-worth
Repayment (capital & interest)
- Monthly: calculated to clear over the term
- Balance: reduces to zero by term end
- No separate repayment plan needed
- Standard for residential owner-occupiers
Frequently asked questions
How do interest-only mortgages work?
You pay only the interest each month, not the capital. The full loan balance remains outstanding and must be repaid in full at the end of the term, usually via a separate repayment vehicle (ISA, pension, property sale).
Can I get an interest-only residential mortgage in the UK?
Yes, but high-street lenders are strict. You typically need a minimum £50–£100k income, high equity (often 50% LTV cap) and a credible repayment plan. Specialist lenders are more flexible, especially for over-55s.
Are BTL mortgages interest-only?
Most UK buy-to-let mortgages are interest-only — it maximises tax efficiency and cash flow. The sale of the property typically repays the loan.
What repayment vehicles do lenders accept?
Common options: ISA/investment portfolio, pension lump sum, sale of a second property, sale of the mortgaged property (mostly downsizing). Endowments are largely extinct.
Is interest-only cheaper than repayment?
The monthly payment is lower, but the total cost is usually higher because you never reduce the capital. You also need to fund the repayment vehicle alongside.
Reviewed by the Mortgage118 editorial team. Interest-only mortgages require a credible repayment plan; lenders assess this as part of underwriting. This calculator provides an estimate only and does not constitute mortgage advice.