See the real cost of an interest-only mortgage compared to a traditional repayment mortgage. Understand the monthly payments and the final outstanding balance.
An interest-only mortgage can seem attractive because the monthly payments are significantly lower than a standard repayment mortgage. This is because you are only paying the interest that accrues on the loan each month, not any of the original capital you borrowed. This Calculator Site tool is designed to make the difference clear.
While the lower payments offer flexibility, it is critical to understand the major drawback: at the end of the mortgage term, you will still owe the entire original loan amount. You must have a clear and credible repayment strategy in place to pay back this capital. Without one, you risk losing your home.
A Critical Warning: The Repayment Cliff
The single biggest risk of an interest-only mortgage is failing to repay the capital at the end of the term. Lenders require a bulletproof repayment plan, such as an investment portfolio, a pension lump sum, or the sale of another property. Simply planning to sell the home you live in is often not accepted. Explore your options with our repayment calculator to compare.
Historically, interest-only mortgages were more common. Today, they are a niche product often used by buy-to-let landlords who plan to sell the property to repay the mortgage, or by individuals with significant investments. For most residential homebuyers, a traditional repayment mortgage is the more straightforward and safer path to homeownership.
Lower Payments
Primary benefit for cash flow
100% Capital Due
Full loan amount owed at term end
Credible Plan
A separate repayment vehicle is mandatory
This calculator helps to illustrate the financial implications and the large lump sum you will need to find. You can also check how your take-home pay might affect your borrowing capacity.
How to use this Calculator Site tool
Use the sliders and inputs above to set your property price, deposit, interest rate, and mortgage term. The calculator instantly shows the monthly cost for both an interest-only and a standard repayment mortgage. Pay close attention to the 'Capital Owed' figure in the results – this is the amount you must repay at the end of an interest-only term.
Mortgage Calculator
Calculate your monthly mortgage repayments based on the loan amount, interest ra...
Mortgage Overpayment Calculator
See how much you could save by making overpayments on your mortgage.
Buy-to-Let Mortgage Calculator
Calculate mortgage costs and rental yield for buy-to-let property investments.
House Affordability Calculator
Find out how much you can afford to borrow for a house based on your income and ...
Remortgaging Savings Calculator
Calculate how much you could save by remortgaging to a lower interest rate.
Early Mortgage Repayment Penalty Calculator
Calculate early repayment charges and whether it is worth paying them to switch ...
We use cookies to ensure the website works properly and to help us understand how it is used. You can accept all cookies, reject non-essential ones, or manage your preferences. Read our Privacy Policy for full details.