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Interest Only Mortgages

At Deedle Finance, we will match you with the best mortgage rates on the market. Our team of advisors aims to understand your unique needs and budget in order to secure the best deals available.

Our mortgage advisors take the time to learn your needs and budget so they can match you with the best interest only mortgages on the market for completely free.


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How To Get An Interest Only Mortgage

Step 1
Complete Deedle's Form
Enter key details on our online form including your name, contact information and requirements.
Step 2
Get A Callback
When you submit your quick online form, our professional advisors will contact you to provide guidance throughout the mortgage process.
Step 3
Check If You Qualify
Our advisors will ask for some key pieces of information such as your annual income. This is to assess your borrowing capacity and find the best interest rates for you.
Step 4
Receive Your Interest Only Mortgage
Once we have found a loan to suit your borrowing requirements, our advisers can submit your mortgage application and help you get on the property ladder ASAP!
What Is an Interest Only Mortgage?

What Is an Interest Only Mortgage?

An interest-only mortgage allows you to pay only the interest charges on your loan each month, without any portion going towards the original borrowed capital. This means your monthly payments are lower compared to a repayment mortgage.

At the end of the mortgage term, you will still owe the initial borrowed amount to the lender. You will only have paid the interest, meaning you will still have the initial amount left to pay.

Typically, this outstanding balance needs to be paid as a lump sum.

Are Interest-Only Mortgages Suitable for You?

Interest-only mortgages may not be suitable for everyone. They require careful consideration and planning. This is because at the end of your mortgage, you will need to pay a large lump sum.

Before taking out an interest-only mortgage, consider factors such as:

  • Financial stability
  • Investment strategies
  • The ability to repay the loan at the end of the term
Are Interest-Only Mortgages Suitable for You?

What Are the Advantages of an Interest Only Mortgage?

  • Lower monthly payments compared to a repayment mortgage, which can provide more flexibility in your budget.
  • The ability to invest the money saved on lower payments into other investments or financial goals.
  • More manageable monthly payments during the mortgage term, especially for those with irregular income or expecting a future increase in income.

What Are the Disadvantages of an Interest Only Mortgage?

  • At the end of the mortgage term, you will still owe the original borrowed amount in full, which needs to be repaid as a lump sum.
  • Depending on your investment or savings strategy, there is a possibility of falling short in repaying the loan amount at the end of the term.
  • If the property value decreases or fails to appreciate significantly, it may become challenging to sell the property and repay the loan in full.

Get The Best Rates For Interest Only Mortgages

Can I Get an Interest-Only Mortgage for a Buy-To-Let Property?

Yes. Interest-only mortgages for buy-to-let properties are available but may have specific requirements and conditions. Lenders typically assess the viability of the investment property and the potential rental income it can generate. Eligibility criteria, loan-to-value ratios, and interest rates may differ for buy-to-let interest-only mortgages compared to residential properties.

Are There Any Restrictions on the Term Length for an Interest-Only Mortgage?

Yes, sometimes. The term length for an interest-only mortgage can vary depending on the lender’s policies. Some lenders may impose restrictions on the maximum term length for interest-only mortgages. Typically, the maximum term length ranges from 25 to 30 years, but it is advisable to check with your lender to understand their specific terms and conditions. (Source)

Why Should I Get An Interest-Only Mortgage With Deedle?

At Deedle, we understand the stress that comes with purchasing a property, and we are here to offer our support. Our team of mortgage advisors is committed to guiding you throughout the entire process, starting from the initial consultation until the successful completion of your mortgage. We handle all the necessary paperwork, maintain communication with lenders, and ensure a seamless experience, saving you valuable time, alleviating stress, and minimizing effort.

Regardless of your credit history, employment status, or retirement status, our team of experts is dedicated to helping you secure a mortgage that aligns with your unique needs. With our extensive experience in the mortgage industry, we diligently search through countless mortgage deals, meticulously looking through each one to find the perfect fit for your specific circumstances and requirements.

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What is the Difference Between Interest-Only and Repayment Mortgages?

Interest-Only Mortgage

With an interest-only mortgage, you pay the interest on the loan in instalments. At the end of the term, you will still owe the original amount you borrowed which will be paid in a lump sum.

Repayment Mortgage

With a repayment mortgage, you pay back a small part of the loan and the interest each month. At the end, you will not owe any money, but the monthly repayments will be higher.

If you borrow £200,000 over 25 years, at an interest rate of 3%, here is how that would look with an interest-only vs. a repayment mortgage:

Basis Monthly Payment
Situation After 25 years
Interest-only £500 Owing £200K
Repayment £948 Owing £0

Frequently Asked Questions About Interest Only Mortgages

Can I Switch From an Interest-Only Mortgage to a Repayment Mortgage?

In many cases, it is possible to switch from an interest-only mortgage to a repayment mortgage. However, eligibility and options may vary depending on your lender’s terms and conditions.

Can I Make Partial Capital Repayments During an Interest-Only Mortgage Term?

Yes, sometimes. In some cases, lenders may allow borrowers to make partial capital repayments during the term of an interest-only mortgage. This can help reduce the outstanding loan balance and potentially mitigate the need to repay the entire loan as a lump sum at the end of the term.

Can I Get an Interest-Only Mortgage if I Am a First-Time Homebuyer?

First-time homebuyers may be eligible for an interest-only mortgage, but lenders typically have specific requirements for this type of borrower. They may require a higher deposit, stricter affordability assessments, and additional proof of a solid financial plan to repay the loan at the end of the term.

Are There Alternatives to Interest-Only Mortgages?

Yes, there are alternative mortgage options available. One alternative is a part-and-part mortgage, which combines elements of both interest-only and repayment mortgages.

Other alternatives include flexible mortgages or offset mortgages, which allow you to offset your savings against the mortgage balance to reduce the interest charged. You could also consider a 100% LTV mortgage, although these are rare.

Who Should Get an Interest-Only Mortgage?

  • Buyers with a reliable investment strategy in place to repay the loan at the end of the term
  • Buyers with irregular or fluctuating income who prefer lower monthly payments during the term
  • Buyers who are interested in investing in the stock market or businesses