Interest Only Mortgages

“I have helped many property professionals scale their property portfolios and achieve their goals . If you are looking for a mortgage broker to navigate you through the mortgage process then you are in the right place. “

lets get started!

Fill out the form below and we will get back to you shortly.

1 Step 1
By submitting your details in this form, you agree to occasional marketing information via email around relevant products and services. You can opt-out of this at anytime
You have read and agree to our privacy policy. You can review our privacy policy by clicking here.
FormCraft - WordPress form builder

As seen on

Interest-Only Mortgage

An interest-only mortgage is when you pay only the interest on your monthly mortgage payments which makes these monthly payments much cheaper compared to a regular repayment mortgage. Although both have their advantage and disadvantages. This interest-only mortgage is convenient as it makes payments much more affordable although you are not actually paying towards the amount you have borrowed and at the end of this term you will still owe this original amount.

Table of Contents

 Important Factors to take into consideration when getting an interest only mortgage

As you have the pleasure of making lower monthly payments when obtaining an interest-only mortgage the lender will be strict when it comes to how you plan on repaying the capital you have borrowed at the end of the mortgage. You must take these factors into consideration:

  • Have a payment plan on how you manage to repay the capital at the end of your mortgage. Meeting with a financial advisor is crucial as they can help you find a plan what works best for you to ensure you can afford to make this payment.
  • Make lump-sum payments throughout the time you have. If you are regularly saving money to make lump-sum payments over time you can knock out large amounts of the capital, you must repay. This may apply perfectly to people who earn mainly on commission as if there are times you receive bigger payments you can wisely invest.

If you see yourself struggling to pay this loan in the end you should potentially consider re-mortgaging and switching to a repayment mortgage at a better rate.

It is vital you plan ahead of time even if this is several years ahead of time you will have more options if you are preparing yourself and revising your options regularly if you have any doubts.

Why is Interest only mortgage a good idea?

Interest-only mortgages generally have lower monthly payments than a capital repayment mortgage which allows better cash flow for a household. You would usually use to have a strategy in place to repay the capital at the end of the term. This could include the sale of the property, sale of another property, or maturing investments. However, these mortgages are not as common as standard mortgages, and the lending criteria are a much stricter process.

Speak To Hemal

I have successfully assisted hundreds of people get their dream mortgage. With many years of experience as a Mortgage Broker. I have come across all types of clients who have trusted me to guide them through what can feel like a daunting process. I provide and lead my clients through this entire process with a precise, attention to every detail, in an effort to make sure their mortgage plans are being met with clarity and proficiency.

Can I change my interest only mortgage to repayment?

Yes absolutely. In fact lenders always encourage for you to do this. Speak to a mortgager broker who will be able to assess your needs and the lenders criteria. Although in most cases you can switch to repayment mortgage from interest only, you still must be able to afford the mortgage. Switching your mortgage to repayment will mean higher monthly mortgage payments.

Can I switch to interest only mortgage?

Yes you can switch your mortgage to interest only. you will need to have a repayment strategy in place and meet the lenders interest only criteria. It’s best to speak to a broker to see what options are available. some lenders will cap the loan to value at 70%.

Can a first time buyer get an interest only mortgage?

Yes absolutely. you must meet the lenders criteria however. Some lenders want to see that you are earning above £100,000 per annum and some lenders want you to put down a minimum deposit of 30%. We have access to the market and are able to recommend you a mortgage product based upon your needs.

Switching to interest only mortgage 

it’s a possibility you can do this. Some lenders will let you switch your mortgage to interest only if you are having difficulties paying your repayment mortgage. You must consider the following,

  • You must pay back the capital that is borrowed so you must have a credible repayment strategy in place for when the mortgage term ends.
  • Many lenders expect a minimum  annual income of £75,000 – £100,000
  • Lenders will cap the loan to value to around 70%
If you are experiencing difficulties meeting your monthly mortgage payment then please contact your lender immediately. Citizen advice website also has more infrmation to help you. 

Interest only mortgage vs repayment

Interest only mortgage can be really beneficial depending on your circumstances. 

Interest only mortgages have a much lower monthly payment as you are paying just the interest and not the capital . Low monthly payments can increase your cashflow allowing you to re invest your surplus funds into assets that may make you more money. 

the negative with a interest only mortgage is that you will need to pay off the capital at the end of the mortgage term and it may cost you more overall including he interest element. 

Repayment mortgages come with higher monthly payments as you are paying off the capital at the same time. You will have peace of mind knowing that the mortgage will be paid off by the end of the term. 

Are buy to let mortgages interest only?

Most property investors opt for interest only mortgages. They do this because they wants to profit from the rental income minus the mortgage payments. having a interest only mortgage helps keeping the monthly mortgage payments low. 

Lenders criteria for a buy to let interest only is a lot different to a mortgage for a home you will occupy. The reason is because the repayment strategy tends to be sale of the investment property. 

How can we help?

Over the years we have helped many individuals and families secure an interest-only mortgage product. We provide advice and recommendations according to your circumstances when obtaining a mortgage. Our advisors assess your circumstances and then advise and recommend according to your needs.

Why Mortgage Avenue

About the author

Hemal is an expert in mortgages and has successfully helped many people buy and remortgage their properties by fully assessing your needs and making advice and recommendation that suits your circumstances.
Hemal started the business during the pandemic and put customer service and expert advice at the forefront. Hemal has had media publications like BBC news, BBC radio and other media sources.
Read more about Mortgage Avenue.