Pay only the interest each month and repay the loan itself at the end of the term. Lower payments, stricter criteria - and the lender must believe your repayment plan.
Access to all UK lenders offering interest only
Repayment strategy guidance lenders accept
CeMAP qualified advisers with 20+ years' experience
With an interest only mortgage you pay just the interest on the loan each month, so the balance itself never reduces. At the end of the term you repay the full amount borrowed in one go, using a repayment strategy the lender approved at the outset.
Monthly payments are substantially lower than on a repayment mortgage for the same loan, which is the appeal. The discipline sits in the background: something has to grow, sell or mature to clear the balance at the end.
Since the financial crisis, lenders apply firm criteria to residential interest only - minimum equity, income thresholds with some lenders, and evidenced repayment strategies. Criteria differ enough between lenders that whole-of-market advice genuinely changes the outcome.
A part-and-part mortgage splits the loan between the two approaches.
Because the balance never falls, you pay interest on the full amount for the whole term - so an interest only loan costs more in total interest than the same loan on repayment, in exchange for the lower monthly commitment.
Repayment strategies lenders accept
The repayment strategy - how the loan gets cleared at the end - is the heart of an interest only application. Lenders check it exists at the start and typically review it during the term. Commonly accepted strategies:
Sale of the mortgaged property - usually needs substantial minimum equity, with a credible plan to downsize
Sale of another property you own
Investments - ISAs, shares or investment portfolios, evidenced with statements
Pension lump sums - within sensible limits lenders will accept projected tax-free cash
Endowment or other maturing policies
Regular overpayments alongside the interest, reducing the balance voluntarily
Each lender maintains its own list, minimum amounts and evidence rules. Matching your strategy to a lender who accepts it is precisely the job of whole-of-market advice.
Who interest only suits
Borrowers with irregular or bonus-heavy income who want a low committed payment and the freedom to overpay
Those with a clear repayment asset - investments, another property or pension cash
Homeowners planning to downsize, with plenty of equity to support the plan
Landlords - interest only is the standard structure on buy to let
Higher-value borrowing, where flexibility over capital matters
For landlords the mechanics differ - rental income does the qualifying - and our buy to let mortgage page covers that world. Older borrowers who want interest only without a fixed end date should look at retirement interest only mortgages, where the loan runs until the home is eventually sold.
Criteria and eligibility
Typical themes across residential interest only lending:
Lower maximum loan-to-value than repayment lending - substantial equity or deposit expected
Minimum income thresholds with some lenders, particularly at higher loan sizes
An approved, evidenced repayment strategy from the lender's accepted list
Affordability often tested as if the loan were on repayment - the lower payment does not mean you can borrow more
Part-and-part accepted by many lenders where full interest only doesn't fit
Criteria move between lenders and over time; the practical answer is a conversation about your numbers rather than a table that goes stale.
Costs and fees
The cost structure matches any mortgage: possible lender arrangement fees, valuation and legal work. On purchases the valuation is free in most cases; if you are moving an existing mortgage to interest only with a new lender, that is a remortgage - and valuation and legal fees are free on all remortgages we arrange.
Our broker fee is typically £1,250, confirmed with you in writing before you commit to anything. Full details are in our regulatory statement.
Why use LifePro?
Whole-of-market, independent mortgage brokers covering all of the UK
We know which lenders accept which repayment strategies - and at what equity levels
Part-and-part structuring where full interest only doesn't fit
CeMAP qualified advisers with 20+ years' experience
Free valuation and legal fees when your interest only switch is a remortgage
Frequently Asked Questions
What happens at the end of an interest only mortgage?
The full loan becomes due, repaid through the strategy agreed with the lender - selling the property, investments, pension cash or another approved route. If a shortfall is looming, act early: options include overpaying, extending, switching to repayment or a retirement interest only mortgage.
Can I overpay an interest only mortgage?
Almost always, within the deal's usual overpayment allowance. Overpayments reduce the capital directly, cutting both the interest charged and the amount due at the end - many borrowers use interest only for its low committed payment, then overpay when income allows.
Can I switch my repayment mortgage to interest only?
Sometimes. With your current lender it is a contract change they may or may not allow; with a new lender it is a remortgage assessed against their interest only criteria - equity, income and repayment strategy. Valuation and legal fees are free on remortgages we arrange.
Why are interest only criteria stricter?
Because the lender carries the full balance for the whole term, they want confidence it will actually be repaid. That means more equity, sometimes minimum incomes, and a repayment strategy they recognise - protections introduced after interest only was widely sold without repayment plans.
Is buy to let interest only different?
Buy to let is where interest only remains standard. Lenders qualify the loan on rental cover rather than personal repayment strategies, with sale of the property the usual exit. Criteria and stress tests are specific to landlord lending - see our buy to let pages.
What is a part-and-part mortgage?
A split loan: part repayment, part interest only. The repayment slice reduces over the term while the interest only slice keeps payments manageable. It suits borrowers who want a smaller, known balance at the end without the full cost of a repayment mortgage.
Structure Your Mortgage Around Your Plans
Speak to a CeMAP qualified adviser about interest only, part-and-part and which lenders fit your repayment strategy
Whole-of-market advice • Broker fee typically £1,250, confirmed before you commit • CeMAP qualified advisers
Your property may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage. Not all Buy to Let Mortgages are regulated by The Financial Conduct Authority.
