Definition

Monthly payments normally cover mortgage interest, while the original capital remains due at the end of the term. Residential lenders require an acceptable repayment strategy and may review it. Interest-only is also common in buy-to-let, where the property or other assets may form part of the repayment plan.

Practical example

A £200,000 interest-only mortgage can still owe £200,000 at term end if no capital payments are made.

Why it matters

Lower monthly payments do not mean lower overall risk; the full capital needs a credible repayment route.

Mortgage repayment calculator

Source and review

Reviewed 16 July 2026. Product criteria and rules can change.

MoneyHelper: mortgages and interest rates

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