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Interest Only Mortgages UK’s Lowest Rates
Interest only mortgages make up just shy of 10% of the total Mortgages in the UK. They are commonly used by landlords as a strategic tool to leverage cash flow and maximise returns from tenants. However, it is not just right for landlords. There are many circumstances where an interest only mortgage may be desired, and there are various customer profiles that make up the total number across the UK that opt for this solutions.
There are many reasons why people would get an interest only mortgage, and throughout this page we will asses the pro’s and con’s of each. You should definitely get expert advice, and ensure you conduct a search across the market and make an educated decision of all your options. Not just one’s that one lender has offered.
At The Mortgage Broker, we specialise in offering clear, professional advice and access to over 25,000 mortgage products from more than 130 lenders, ensuring you get tailored recommendations – not just generic rates. Our 5-star rated team on Trustpilot and Google is here to help you make confident, well-informed decisions about your mortgage journey and help decide whether or not an interest only mortgage is right.
What Is the Difference Between Interest Only and Repayment Mortgages?
The key difference lies in how the mortgage is pay back at the end of the term:
| Mortgage Type | Monthly Payments | Capital Repaid | End of Term |
| Interest Only | Lower (interest only) | No | Full loan remains |
| Repayment | Higher (interest + capital) | Yes | Mortgage fully paid |
Interest only mortgages can offer more flexibility and affordability short-term, but higher long-term risk. Repayment mortgages ensure that the debt is fully paid off over time, offering greater financial certainty.
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Buy to Let Landlords use Interest Only Mortgages to Maximise Rental Yield!
Search and Compare Interest Only Mortgage Rates with Standard Repayment Mortgages.
We can quickly search and compare interest only mortgage rates through our platform or you speak directly to one of our expert mortgage brokers. Unlike comparison sites that show a limited selection, or going direct to your lender who can only offer a handful of products, The Mortgage Broker provide access to over 25,000 mortgage products – and we help you filter by lender criteria, term, LTV, and repayment strategy. Best of all, you’ll get rates and guidance tailored to your needs, not just a list of numbers.
If you’re exploring your mortgage options, you may have come across the term, interest only mortgage. This type of mortgage can be an attractive choice for many type of borrowers, but it is essential that you understand how it works, what the risks are and whether it suits your financial goals, not to start paying off your mortgage.
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FAQ’s: The Mortgage Broker.
At The Mortgage Broker, we specialise in offering clear, professional advice, with access to over 25,000 mortgage products from more than 130 lenders. We will tailor our recommendations, as well as get you instant access to the best interest only mortgage rates. Our 5-star rated team is here to help you make confident and well informed decisions about your mortgage.
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Yes. At The Mortgage Broker, we work with over 130 lenders to help clients find the most suitable interest only mortgage products. Whether you’re purchasing a new home, remortgaging, or investing in property, we offer expert advice, full-market access, and personalised solutions based on your financial situation and goals.
At The Mortgage Broker, we help landlords frequently:
- Compare buy-to-let interest only mortgages from across 130+ lenders
- Choose the right strategy based on cash flow goals and exit plans
- Help understand the tax and long-term implications of interest only borrowing – please note we are not tax advisers
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Search and Compare Interest Only Mortgage Rates with Standard Repayment Mortgages.
We can quickly search and compare interest only mortgage rates through our platform or you speak directly to one of our expert mortgage brokers. Unlike comparison sites that show a limited selection, or going direct to your lender who can only offer a handful of products, The Mortgage Broker provide access to over 25,000 mortgage products –and we help you filter by lender criteria, term, LTV, and repayment strategy. Best of all, you’ll get rates and guidance tailored to your needs, not just a list of numbers.
Request a call backFAQ’s: Interest Only Mortgages.
An interest only mortgage is a mortgage where your monthly payments cover only the interest on the amount borrowed. You are not making repayments on the mortgage borrowing and thus not reducing the capital initially borrowed. This means your monthly payments are lower, but at the end of the mortgage term, you must repay the full balance of the original loan amount. This typically happens through selling of the property, savings, investments or a windfall of some kind.
Yes of course. However, please do just note that it is really important to get advice around the right products, and access to the best rates. However, you can simply click below to go to our own Interest Only Mortgage Calculator.
Using an interest only mortgage calculator is a good first step, but it is just a quick tool to estimate rough monthly payments. For accurate and personalised results, we recommend speaking to one of our experienced mortgage advisers who can within minutes, search the market for you, but do so based on some very quick high level information. Our team do not require any documentation to get you a mortgage in principle.
With an interest only mortgage:
- You pay only the interest due each month
- Your loan balance stays the same throughout the term
- You are expected to have a repayment plan (e.g. savings, investment, downsizing)
For example, if you get a mortgage to the value of £200,000 on an interest only repayment basis, you will only pay the interest that incurs over that period. This may be say, £500.00 per month. However, when you get to the end of the mortgage term, or you decide to sell the property, you will still owe £200,000 to the mortgage lender on the day you wish to settle the loan.
An interest only mortgage, could be the right move for you if you need to lower monthly payments or what a greater cash flow flexibility. There will need to be a clear repayment strategy and it is not suitable for everyone. Our qualified advisers will help assess whether an interest only mortgage is financially beneficial or whether a repayment mortgage would offer better long term value and security.
Just like all mortgages, the amount you can borrow depends on a few factors, but it is very quick to get the answer. There is no specified limit but the below applies the same:
- Your Income and Affordability
- Your Loan-to-Value (LTV) Ratio. I.e. what % of the price not covered by your deposit
- The Mortgage Lender: Their criteria and credit history requirements
- Your repayment plan for the capital borrowed
Some interest only mortgage lenders do also require a minimum income level, but we can search that for you and know the right lenders to go to dependent on the circumstances. Also, some require a minimum deposit of 25% or more. It is crucial to work with a broker who has access to the market and knows the criteria across a broad range of lenders.
No, not necessarily when it comes to monthly payments, but yes over time. There is not a set correlation between the interest rates (monthly cost of the mortgage), and whether it is interest only or repayment. However, the total interest paid over time can be more expensive as you are not reducing the mortgage balance.
They can be suitable for a variety of borrowers, particularly those with a strong repayment plan or fluctuating income.
- BTL Landlords & Investors maximising rental yield
- High Net Worth Individuals
- Professionals with bonuses or irregular Income
- Clients planning to sell or downsize at the end of the mortgage term
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Yes. However, it will always depend on that particular lenders criteria and early payment penalties or switching policies.
Yes, it’s possible to switch mortgage types – but it will depend on your lender’s policies and your current financial situation. Some borrowers start on an interest only basis to manage initial costs, then switch to a repayment mortgage later. Others may refinance an existing repayment mortgage to interest only to reduce outgoings temporarily.
Yes, they do. Generally, mortgage lenders have a stricter criteria for interest only mortgages compared to standard repayment mortgages. There is more risk involved for the lender, as you’re not required to reduce the loan size over time at all and therefore, they are more reliant on your ability to repay the full amount at the end of the term. So they are going to want to know the plan. You need proof of a credible repayment strategy and demonstrate how you intend on repaying the capital at the end of the mortgage term. Acceptable strategies vary, but generally speaking the following are usual practices: “I’ll figure it out later” is not an acceptable reason, however high your salary or perfect your credit file is. Higher Deposit Requirements can be a stumbling block for interest only mortgages If you’re unable to repay the balance of your interest only mortgage at the end of the term, you may face serious financial consequences and risk losing your home. Options sometimes include: It’s essential to speak with a mortgage adviser well before your term ends. At The Mortgage Broker, we’ll help you explore all available options and find a practical, safe solution.FAQ’s: Interest Only Mortgage Lenders.
Interest only mortgages usually require:
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FAQ’s: Buy to Let Interest Only Mortgages.
An interest only mortgage for a buy-to-let landlord is one of the most common and strategic borrowing methods used by property investors and even first time buyer landlords. It enables you to keep monthly payments lower while focusing on rental yield and long-term capital growth. Below is a detailed overview tailored to landlords looking to understand how these mortgages work, the benefits, and what lenders expect.
With a buy-to-let (BTL) interest only mortgage, you only pay the interest on the mortgage each month. The full mortgage amount is repaid at the end of the full mortgage term, typically by selling or refinancing the property.
Example:
If you were to borrow £250,000 at 5% interest:
- Monthly payment: £1,042 (interest only)
- Capital repayment: £0 monthly
- Total to repay at end of term: £250,000 (capital)
This structure helps you maximise monthly rental profit, especially where the rental income exceeds the interest-only mortgage payment.
Can You Get Interest Only Buy to Let Mortgages?
Yes, interest only buy to let mortgages are common among Property Investors and portfolio Portfolio Landlords. They help maximise monthly rental yield by keeping repayments lower. You repay only the interest during the term, and typically settle the loan by selling the property or refinancing.
At The Mortgage Broker, we have helped hundreds of landlords and portfolio investors find competitive buy to let interest only products, even in more complex scenarios like HMO’s or Limited Company structures.
How Interest Only Mortgages Help Landlords Leverage Cash
Lower Monthly Payments
Because you’re only paying the interest each month (not the capital), your outgoings are lower compared to a repayment mortgage. This means more of the rental income becomes available cash.
Increased Cash Flow
The extra cash flow can be used to:
- Build a financial buffer
- Cover repairs or void periods
- Reinvest into additional properties (i.e. growing your portfolio)
- Repay other higher-cost debt
Tax Efficiency
It is extremely important to get proper tax advice from an accountant, as there can be tax efficiencies, of course especially through Limited Companies.
Capital Growth Strategy
If a landlord expects property prices to rise, they may prefer not to repay the capital and instead benefit from capital appreciation, selling the property later at a profit.
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FAQ’s: Interest Only Mortgages. Over 55’s.
If you are over the age of 55, you will find yourself classed into the bracket of a later life borrower. There are several interest only mortgage options available for over 55’s, many of which have been specifically designed to support older homeowners who want to stay in their homes, access equity, or manage cash flow during retirement.
Here’s a clear breakdown of the main interest only mortgage options for people aged 55 and over:
Retirement Interest Only Mortgages (RIOs):
RIO mortgages are a newer type of interest only product designed for borrowers typically aged 55+, where you can just make interest payments every month. These mortgages are only repaid upon a life event, such as passing away or moving into a care home/family home. Therefore, you are paying interest for life, and there is no set fixed term on this mortgage. You do keep ownership of your own home.
- Retirees with steady pension or investment income
- Those wanting to avoid equity release or keep costs lower
- Customers who want to leave an inheritance by protecting their capital
Case Example:
You borrow £100,000 on a RIO mortgage and pay £300/month in interest. You never repay the capital during your lifetime and when you pass away or go into care, your home is sold to repay the balance.
Standard Interest Only Mortgages in Later Life
Some mortgage lenders offer traditional interest only mortgages up to the of age 70–85; however, the criteria is generally more strict. You must have a clear repayment strategy (e.g. sale of the property or investments) and you must prove affordability, including pension or investment income. Some lenders do offer interest only terms and offer longer terms that extend beyond retirement age (e.g. up to 85 or age 90)
- Borrowers in their 50s and 60s with strong financial profiles
- Downsizers planning to sell and move in future
- Customers wanting lower monthly outgoings
Equity Release (Lifetime Mortgages)
While technically not an interest only mortgage, some equity release products do allow for voluntary interest payments that are made throughout the term. In fact, these can be encouraged to reduce interest rolling up. These therefore effectively work like a flexible interest only deal where you can borrow against the equity in your home. There are no monthly payments that are required (optional as just mentioned) and interest rolls up to be repaid upon a life event.
- Customers needing maximum flexibility
- Those who don’t want monthly commitments
- Customers whom do not qualify for a RIO or a standard interest only mortgage.
Which Option is Right for ME?
Each option suits different financial goals and lifestyles:
| Option | Monthly Payments | Repayment Trigger | Age Suitability | Ownership |
| RIO Mortgage | Yes (interest only) | Death or care | 55+ | You own home |
| Standard Interest Only | Yes (interest only) | Fixed term | 50–80+ | You own home |
| Equity Release | Optional | Death or care | 55+ | You own home (secured loan) |
Can I Get a Retirement Interest Only Mortgage?
Yes, Retirement Interest Only Mortgages (RIOs) are designed specifically for older borrowers – typically aged 55 and over. These mortgages allow you to:
- Pay only the interest each month
- Repay the capital only when you pass away or move into long-term care
They are a flexible solution for retirees who want to stay in their home and manage cash flow without selling their assets or of course, their home. We can help you assess whether a RIO is right for your retirement planning.
How Do Retirement Interest Only Mortgages differ from Equity Release?
| Mortgage Feature | Retirement Interest Only Mortgage | Equity Release |
| Monthly Payments | Yes (interest only) | None (optional) |
| Ownership | You retain full ownership | Usually a loan against equity |
| Repayment | On death or long-term care | On death/sale of home |
| Affordability Check | Required | Not always required |
| Interest Costs | Lower over time | Compound interest grows |
A Retirement Interest Only Mortgage may be more cost-effective if you can afford interest payments and want to maintain more control over your estate planning.
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