Interest-only mortgages explained
With an interest-only mortgage, you pay the interest on the amount you borrowed each month without reducing the mortgage balance. You get the flexibility to repay the balance later – but you need to show us realistic plans to repay it by the time the mortgage term ends.
- Your monthly payments will be lower
- Pay interest on the full balance every month
- You must have a plan in place to repay the amount you borrowed
Your home may be repossessed if you do not keep up repayments on your mortgage.
How it works
You may be able to apply for any of our residential, offset or buy-to-let mortgages on an interest-only basis.
Are you eligible?
- The deposit you need to provide will be set out in the mortgage you apply for
- You’ll need to earn at least £75,000 a year if applying alone
- In joint applications, one of you must earn at least £75,000 a year, or your combined income must be at least £100,000
- You’ll need to show us how you intend to repay the balance by the time the mortgage term ends
Repaying the balance
- You should consider taking independent financial advice on your repayment plan
- It’s important to regularly review your repayment plan to make sure it’s on track to cover your mortgage balance
- You may have to pay an early repayment charge if you overpay on your mortgage or pay off the balance before the agreed date 1
Getting financial advice
Preparing your repayment plan is vital if you want to apply for an interest-only mortgage.
The main thing to consider is how you’ll provide the money to repay the remaining balance when the mortgage ends. The Money Advice Service provides examples of repayment methods – but we’ll need to agree your plan before we can agree to lend to you.
You can also speak to an independent financial adviser. Search the Financial Services Register to find mortgage brokers that are authorised by the Financial Conduct Authority.
Need some help?
If you want to know more about mortgages, choose how you’d like to get in touch – online, in branch or over the phone. You can also browse our mortgage FAQs .
If you want help choosing the right mortgage for you, you’ll need to call us to speak to a mortgage adviser.
Subject to status and availability. You must be 18 years or over to apply for a mortgage.
- Your mortgage offer terms and conditions will explain your overpayment allowance and confirm whether you need to pay an early repayment charge.
- Lines are open Monday to Friday, 8am-9pm, Saturday 9am-8pm and Sunday 10am-4pm. To maintain a quality service, we may monitor or record phone calls. Call charges.