Yes, but the criteria are stricter than for a repayment mortgage. You pay only the interest each month, so lenders require a credible plan to repay the capital at the end, such as investments, a pension lump sum or selling the property, plus usually a larger deposit and higher income.
The short answer
- Interest-only mortgages are available but come with stricter criteria than repayment deals.
- You pay only interest monthly and must repay the full capital at the end via an approved repayment plan.
- Lenders usually want a larger deposit (often 25%+), higher income and a minimum property value.
You can get an interest-only mortgage, but it’s a more specialist product than the standard repayment mortgage most people use. With interest-only, your monthly payment covers just the interest on the loan: the capital you borrowed stays outstanding for the whole term and must be repaid in full at the end, usually as a single lump sum. That structure keeps monthly payments low, but it places a firm obligation on you to have a credible way of clearing the balance when the term ends.
Since the tightening of lending rules after 2014, lenders scrutinise interest-only applications closely. They will want to see an acceptable repayment vehicle, a concrete plan for repaying the capital, and they typically ask for a larger deposit (often 25% or more), a higher minimum income, and a minimum property value. The days of interest-only being handed out casually are long gone. Understanding how it sits against a repayment mortgage is the starting point, and our guide to getting a mortgage sets out both.
Who interest-only suits
Interest-only mortgage
- Pay only interest each month, lower monthly cost
- Full capital still owed at the end of the term
- Needs an approved repayment plan and bigger deposit
- More interest paid overall across the term
- Best for specific strategies, not the typical buyer
Repayment (capital & interest) mortgage
- Each payment clears interest and a slice of the capital
- The balance is zero at the end: the home is yours
- Easier to qualify for; the standard choice
- Less total interest over the life of the loan
- Higher monthly payments than interest-only
Interest-only is well established in some situations. Buy-to-let landlords use it widely, because the rental income services the interest and the property is often sold or refinanced later. Higher earners with lumpy or bonus-heavy income sometimes use it to keep monthly commitments low while building capital elsewhere. And older borrowers use a variant, Retirement Interest-Only (RIO), where the loan is typically repaid from the eventual sale of the home. For a mainstream first-time buyer, though, a repayment mortgage is almost always the sounder choice.
The variants of interest-only are worth knowing, because one may fit where a full interest-only loan doesn’t. A part-and-part mortgage splits the balance so you repay some capital each month and leave the rest interest-only, keeping payments manageable while steadily reducing the debt. Retirement Interest-Only (RIO) mortgages, aimed at older borrowers, have no fixed end date: the loan runs until you die or move into long-term care, and is then repaid from the sale of the home. Lifetime mortgages, a form of equity release, work differently again by rolling up the interest so there are no monthly payments at all. Each suits a particular stage of life and goal.
The end-of-term reckoning is real
If your repayment plan falls short, investments underperform, a sale doesn’t happen, you must still repay the full capital. Historically some borrowers reached the end of an interest-only term without enough to clear the loan. Treat the repayment plan as a firm commitment, and review it regularly.
How to strengthen an application
To qualify, present a clear, evidenced repayment strategy: ISA or investment statements, pension projections, or details of a second property you intend to sell. Expect to need a meaningful deposit and to clear the lender’s income threshold. Some borrowers use a part-and-part mortgage, part repayment, part interest-only, as a middle path that lowers monthly payments while still chipping away at the capital. It can be a sensible compromise where full interest-only feels too exposed but full repayment is a stretch.
Whatever the structure, the discipline that makes interest-only work is regular review of the repayment plan. If your strategy rests on an investment portfolio or ISA, check at least once a year that it’s on track to clear the balance, and be honest if markets or contributions have fallen behind. Lenders now write to interest-only borrowers periodically for exactly this reason. Where a plan is drifting, options exist, overpaying while rates allow, switching part of the loan to repayment, or extending the term, but they work best when acted on early. Left to the final year, a shortfall can force a rushed sale on poor terms. Buy-to-let sits slightly apart, as most landlord mortgages are interest-only by default and assessed chiefly on the rent the property earns rather than your personal income.
Because lender criteria vary so widely here, matching to the right one matters more than usual. Vetted Wealth is a free service that connects you with independently vetted, FCA-regulated brokers who understand interest-only, buy-to-let and later-life lending, including specialists in Devon and beyond. Remember that this is information, not personal advice; investments used as a repayment vehicle can fall as well as rise, and your home may be repossessed if you don’t keep up repayments. Explore related topics through our mortgages hub or read about professional mortgage advice.
In summary
- Interest-only mortgages are available but come with stricter criteria than repayment deals.
- You pay only interest monthly and must repay the full capital at the end via an approved repayment plan.
- Lenders usually want a larger deposit (often 25%+), higher income and a minimum property value.
- It suits landlords, higher earners and some later-life borrowers, most buyers are better with repayment.
Sources and further reading
- Mortgages MoneyHelper
- Mortgage rules and guidance Financial Conduct Authority
Read the full guide
For the complete picture, see our in-depth guide: Interest-Only Mortgages Explained.
Speak to a vetted mortgage advice specialist
This is free information, not personal advice. When you’re ready, we’ll match you with an independently vetted, FCA-regulated specialist, free, and with no obligation.
