Interest-Only Mortgages

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We'll help you find the right Interest-Only mortgage

If you want to keep your monthly payments low when buying a property, an Interest-Only mortgage could help with achieve that and we can help you find the right one,

Can I get an Interest-Only mortgage?

As the name suggests, with this type of mortgage you will only pay the interest on the amount borrowed. At the end of the loan period you owe exactly what you initially borrowed, and you will have to be able to repay this amount entirely.

Currently, it is more difficult to get an interest-only mortgage and strict criteria has to be met:

A minimum income is often required by lenders
You must be able to put down a substantial deposit - at least 25%
Evidence of how you plan to repay the loan at the end of the mortgage term. Most lenders will request to see more than just having a savings account.

Interest-only mortgages are more often approved for those borrowers at the higher end of the affordability scale that have enough income to afford a repayment mortgage, but there are still lenders who will lend to lower incomes too.

An interest-only mortgage is a higher risk than a repayment mortgage so Fairview Financial will look at your circumstances and advise a suitable option for you. We are also able to search across the market, having access to specialist lenders, to find you a competitive rate based on your affordability.

Compare Interest-Only mortgage rates

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Why get an Interest-Only mortgage?

The main advantage of interest-only mortgages is lower monthly payments since you are only paying the interest due on the amount borrowed. And if you are concerned about having to pay the entire capital at the end of the mortgage term, you may be able to switch to a repayment mortgage later

Interest-Only Buy-to-Let Mortgages

The interest-only mortgages are often found in the Buy-to-Let market. With lower monthly mortgage payments some prefer to use the money they would have otherwise used to repay the mortgage to invest elsewhere instead. Find out more about this type of mortgages and how we can help on our Buy-to-Let page.

Interest-Only Residential Mortgages

An interest-only residential mortgage may be useful for you if:

You are planning to downsize at the end of the mortgage term, when you have to repay the entire mortgage loan
You want to remortgage on an interest-only basis because you want to reduce your monthly payments and you have a suitable repayment vehicle in place
You have an alternative repayment strategy such as investments or equity in other properties that you can sell

Part-and-Part mortgages

It is also possible to split a mortgage into interest-only and repayment with the so-called Part-and-Part mortgages. This means that you will repay part of the mortgage balance as repayment and the other part as interest-only. This way you have the benefit of lower monthly payments while still reducing your debt at the end of the term.

However, bear in mind that since you will have a significant debt to repay at the end of the term, the lending criteria is still strict and lenders will ask to see evidence of a repayment strategy for the interest-only portion of your mortgage.

THINK CAREFULLY ABOUT SECURING OTHER DEBTS AGAINST YOUR HOME.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.

BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

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Fairview Financial Ltd is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority. Fairview Financial Ltd is registered in England and Wales no: 10912424. Registered office: 107 Promenade, Cheltenham, GL50 1NW.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

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Our Fees

A fee may be charged for mortgage advice. The exact amount will depend on your circumstances.

Our standard fee for mortgages is £395 and this is paid when the mortgage is offered. We charge a fee of £295 First-Time Buyers. Other fees may apply depending on the complexity of the work involved or loan amount. The maximum fee we can charge is £795.

Our standard fee for Equity Release is £895 and this is paid on completion.

We also receive a commission from the lender that will vary depending on the lender, product or other permissible factors. The nature of any commission model will be confirmed to you before you proceed. If we receive a commission, this will not affect the cost payable by you.

THINK CAREFULLY ABOUT SECURING OTHER DEBTS AGAINST YOUR HOME.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.

BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

EQUITY RELEASE: THIS IS A LIFETIME MORTGAGE. TO UNDERSTAND THE FEATURES AND RISKS, PLEASE ASK FOR A PERSONALISED ILLUSTRATION. CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT ADVICE.