Interest only mortgages

Interest-only mortgages

How do they work?

Pay the mortgage interest each month without reducing the balance. You’ll need to have a realistic plan to repay the balance by the time the mortgage ends.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Are you eligible?

You’ll need to meet the following conditions before you can apply for an interest-only loan.

  • 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
  • The deposit you need to provide will be set out in the mortgage you apply for
  • You’ll need to show us how you intend to repay the amount you borrow by the time the mortgage term ends

Features of interest-only mortgages

Your monthly payments will be lower

  • That’s because you’re not paying back any of the amount you borrowed – you’re just paying the interest, which is charged on the full balance every month
  • If you meet the eligibility requirements, you may be able to apply for any of our residential, offset or buy-to-let mortgages on an interest-only basis
  • You may have to pay an early repayment charge if you overpay on your mortgage or pay off the balance before the agreed date1

Repaying what you borrowed and getting advice

  • You need to have a realistic plan in place to repay what you’ve borrowed by the time the mortgage ends. We’ll discuss this plan with you
  • You should get independent financial advice on your repayment plan. Search the Financial Services Register to find mortgage brokers that are authorised by the Financial Conduct Authority
  • The Money Advice Service provides examples of repayment methods – but we’ll need to agree your plan before we’ll approve your mortgage application

How to apply

Call us or visit a branch to make an appointment where we can discuss whether you’re eligible to apply for an interest-only mortgage.

Call us

Call us2 any time – lines may be closed at off-peak times on bank holidays and during Christmas.

0333 202 7580

Visit a branch

Find a branch near you that offers appointments with mortgage advisers and see when we’re open.