Compare Interest-Only Mortgages
With each mortgage payment only paying off interest, for many borrowers interest-only mortgages provide a cheaper method of house purchase. See below for the latest rates on interest-only mortgages from the UK’s leading lenders.
Featured Mortgages – Lenders you can apply directly with though our site
Featured Interest only mortgages - Ordered by lowest initial rate
Buy to Let: For landlords purchasing a property for letting.
Discount: The interest rate rises and falls with the provider’s standard variable rate but is set at a lower discounted rate for certain period.
Fixed: The interest rate is fixed for a certain period – usually 1 to 5 years.
Offset: Mortgage interest payments are offset against any savings you may hold.
Tracker: The interest rate rises and falls with the Bank of England base rate.
Variable: The interest rate rises and falls with the provider’s standard interest rate (SVR).
The introductory rate of interest that you will pay for a certain period of time depending on the mortgage type and term.
The length of time that the initial interest rate applies to the mortgage.
This is the mortgage’s Annual Percentage Rate (APR): the interest rate that you will be charged on your mortgage including all charges such as arrangement fees.
The percentage of a property’s value for which the mortgage can be used.
Example: 75% loan to value = 25% deposit.
- Fee To
This is the fee that must be paid to the lender when you take out the mortgage.
If the fee charged is a % we have based the fee on a 150k mortgage.
Will your lender charge you for repaying the mortgage early?
- 1.89%then 3.99%
- Available for existing Halifax customers only.
- 2.19%then 3.99%
- No Fee
- Available for existing Halifax borrowers only.
- 2.29%then 3.99%
- Available for existing Halifax customers only.
We may receive a commission from some of the companies we refer you to, these are displayed with a green ‘More Info' button. Listings with a brown 'Enquire' button refer you to an FCA regulated mortgage broker where we also receive a fixed fee.
Mortgage data supplied by Defaqto. Last updated 11:30, 29/08/2014.
Interest only mortgages explained
If you're looking to get a head start on the housing ladder, or keep your costs low for a while, an interest only deal on your mortgage could be a very favourable arrangement. Instead of paying off a small chunk of your total debt each month, your costs will be limited to only the interest that has been accrued at that point. This could see your monthly outgoings reduced dramatically, especially when lending rates are low.
Typically, the interest only period will last from one to five years, during which time you'll be on a fixed or tracker interest rate, but you can sometimes find one for the entire term.
There are a number of reasons why it might be the best option. It could be that you are facing other expenses, such as starting your own business or saving for a life pursuit. Perhaps you can't be certain that you will be able to sustain your usual level of income for a time or maybe you have a found a place where your money can work harder for you than by paying off your home loan.
It does mean, of course, that by the end of the interest only period you will still owe the lender the same amount that you did to begin with. And if you reach the end of the mortgage and don't have other means to cover your shortfall, you could risk having your home repossessed. As such, you shouldn't look to rely on things like property prices going up or an uncertain windfall as justification for an interest only mortgage.
There is also a possibility that you could fall into negative equity with an interest only mortgage, owing more money than your house is worth, if the market slumps. Consider your options carefully.
Learn more about different types of mortgage with Know Your Money's guide.
Please use our whole of market mortgage comparison to compare all the top brands including RBS Mortgages, NatWest Mortgages, HSBC Mortgages, Santander Mortgages, Yorkshire Building Society Mortgages, Chelsea Building Society Mortgages and The Post Office Mortgages to name a few.
Helpful links for mortgage issues
Gov.uk - The government website's 'Owning and renting property' page features information on a range of issues including buying and selling property, property regulations and taxes, and mortgage aid schemes.
HMRC - HM Revenue & Custom's Stamp Duty page tells you everything you need to know about the tax including reliefs, exemptions, payments and penalties.
Council of Mortgage Lenders (CML) - The CML's consumer information pages feature a host of information on buying a property and choosing and managing a mortgage.
Citizens Advice Bureau - Citizens Advice Bureau's 'mortgage problems' section offers help and advice to people who are having trouble keeping up with their mortgage repayments.