Interest-only mortgage calculator
On an interest-only mortgage you pay only the interest each month and still owe the full balance at the end. The monthly cost is the balance times the rate, divided by twelve: on £200,000 at 4.5% that is £750 a month, against about £1,112 on repayment. The catch is that all £200,000 is still owed after the term, so you need a credible plan to repay it. This free calculator shows the monthly cost, the total interest and the balance left. No email, nothing stored.
Work out an interest-only cost
Free. No email needed. Runs in your browser, stores nothing.
Interest-only monthly
£750
Balance owed at the end
£200,000
Total interest over term
£225,000
Worked example: £200,000 at 4.5% costs £750 a month interest-only, against about £1,112 on repayment, so you save roughly £362 a month. But the full £200,000 is still owed after 25 years, and you will have paid about £225,000 in interest with nothing off the balance. Change the figures for your own case.
Simplified illustration at a rate assumed fixed for the whole term. The repayment comparison uses the standard amortisation formula. Interest-only needs an approved repayment plan; without one it is not available. Not a quote and not advice. A regulated broker can confirm your real figures.
The lower payment has a price
Interest-only looks cheaper because you are not repaying any capital, only servicing the interest. The trade-off is that the debt does not shrink: whatever you borrowed, you still owe at the end. Lenders therefore require a credible repayment plan, a repayment vehicle such as savings, investments or the sale of another asset, before they will offer interest-only. Compare the monthly saving against the reality of owing the full balance later, and see the repayment calculator for the like-for-like.
Where interest-only fits
- Buy-to-let. Common, because rental income services the interest and the property can be sold to repay. See buy-to-let mortgages.
- Residential, on tight terms. Possible but restricted: lenders want a clear repayment strategy and often minimum income or equity.
- Part-and-part. Some borrowers split the loan, part repayment and part interest-only, to balance monthly cost against clearing the debt.
Common questions
How is an interest-only mortgage payment worked out?
You pay only the interest on the full balance each month, so the monthly payment is the balance times the annual rate, divided by twelve. Because you never reduce the capital, the payment stays level and the full balance is still owed at the end of the term. This tool shows that monthly cost, the total interest over the term, and the balance you still have to repay.
What is the catch with interest-only?
The monthly cost is lower, but you owe the entire original balance at the end of the term and need a separate, credible plan to repay it, such as savings, investments or selling the property. Lenders require evidence of that repayment plan (a repayment vehicle) before they lend. Without one, interest-only is not an option, and paying interest for 25 years costs far more in total than repayment.
Is interest-only cheaper than repayment overall?
No. Month to month it is cheaper because you are not repaying capital, but over the full term you pay interest on the whole balance the entire time and still owe it all at the end. A repayment mortgage costs more each month but clears the debt. Compare the monthly saving against still owing the full balance later.
Can I get a residential interest-only mortgage?
It is possible but restricted for residential borrowers: lenders want a clear repayment strategy, often a minimum income or equity, and they lend on tighter terms than for repayment. Interest-only is far more common in buy-to-let, where rental income services the interest. A broker can tell you which lenders consider residential interest-only and on what basis.
Want to bring the balance down faster instead? See the overpayment calculator.
Founder, MortgageExplained, MortgageExplained
Adam spent nearly a decade as a mortgage adviser at Just Mortgages, with further experience in commercial finance. He is CeMAP and CF qualified. He built MortgageExplained to do one thing well: explain mortgages in plain English, then introduce you to a regulated broker when you are ready. Every page is written and reviewed by Adam.
Last reviewed: 21 July 2026