Interest Only Mortgage Adviser
Interest-only mortgages significantly reduce monthly payments, but access is restricted to borrowers who can demonstrate a credible repayment strategy. We know which lenders will consider your case and what they need to see.
With an interest-only mortgage your monthly payments cover only the interest on the loan. The original capital is repaid as a lump sum at the end of the term. This typically reduces monthly outgoings by 30 to 40% compared to a repayment mortgage — a meaningful saving on larger loans. For more information, see the FCA guidance on interest-only mortgages.
On a £400,000 mortgage at 4.5%, a repayment mortgage over 25 years costs approximately £2,200 per month. An interest-only arrangement on the same loan costs around £1,500 — a saving of £700 per month. The trade-off is that the original £400,000 must be repaid in full at the end of the term.
Who qualifies for a residential interest-only mortgage?
Residential interest-only is not available to average earners. Since post-financial-crisis regulatory changes, lenders require minimum income thresholds and a documented repayment strategy before they will approve an interest-only application. Most high-street lenders require at least £75,000 annual income for a single applicant and £100,000 combined for a joint application, with a maximum LTV of 75 to 80% and a maximum age of 70 at the end of the term.
What counts as an acceptable repayment strategy?
You must have a specific, documented plan for repaying the capital at the end of the term. Lenders will not accept vague intentions. The most common accepted strategy is the eventual sale of the mortgaged property — the loan is repaid when the property is sold and the lender requires sufficient equity at the outset. FCA-regulated investment portfolios such as stocks and shares ISAs, unit trusts, and OEICs are accepted where the portfolio has been held for at least 12 months and the lender applies a discount to current values to account for potential market falls. Endowment policies are accepted if the projected maturity value is sufficient to cover the outstanding loan. Some lenders will accept a pension lump sum for borrowers approaching retirement who can evidence projected pension income and an accessible lump sum at mortgage maturity.
Part-and-part mortgages
A part-and-part mortgage splits the loan — part runs on a repayment basis and part on interest-only. This lowers the lump sum required at the end while keeping monthly costs well below a full repayment structure. It is a practical option for borrowers who partially meet interest-only criteria or who want the cash-flow benefit without full interest-only exposure.
Interest-only for buy-to-let
Interest-only is the standard structure for buy-to-let mortgages and is widely available without the strict income or repayment vehicle requirements that apply to residential cases. Landlords use the monthly rental income to service the interest, and the capital is typically repaid on eventual sale of the investment property. Almost all buy-to-let mortgage products on the market are structured on an interest-only basis.
What We Do For You
Access to Specialist Lenders
Not all lenders offer residential interest-only products. We know which do and which will consider cases with varied repayment strategies, including overseas assets and investment portfolios.
Repayment Strategy Assessment
We review your repayment plan before approaching lenders, ensuring it meets criteria and that the documentation you need is prepared before the application goes in.
Part-and-Part Structuring
If a full interest-only product is not accessible, a part-and-part arrangement may give you significant cash-flow savings while remaining within lender criteria.
Interested in an interest-only mortgage?
Tell us about your income, assets, and repayment strategy. We will assess which lenders will consider your case and find the most suitable structure for your circumstances.