How interest-only mortgage payments are worked out
The formula, monthly payments for common loan sizes, the comparison with repayment, and the savings needed to clear the loan.
When the Bank of England changes Bank Rate, some mortgage payments change within weeks and others do not move at all. What happens to yours depends on the type of mortgage you have. At the time of writing, on 1 November 2026, Bank Rate is 3.75%, and the next decision is due on 5 November 2026.
Rule of thumb: on a repayment mortgage at about 4.5% with 25 years left, each quarter point change in your rate moves the payment by about £14 a month for every £100,000 you owe.
Which mortgages it affects
| Mortgage type | What happens when Bank Rate changes |
|---|---|
| Tracker | Your rate is Bank Rate plus a set margin, so it moves by the same amount. |
| Standard variable rate | Your lender decides. It often follows Bank Rate, but does not have to, and may not move by the full amount. |
| Discount | Set at a discount to the lender's standard variable rate, so it moves when that does. |
| Fixed | No change until the fixed period ends. The new rate you get then reflects rates at that time. |
How much your payment changes
The change in your monthly payment on a repayment mortgage, starting from 4.5% with 25 years left.
| Balance | +0.25% | +0.5% | +1% | −0.25% |
|---|---|---|---|---|
| £100,000 | +£14.28 | +£28.76 | +£58.26 | −£14.09 |
| £150,000 | +£21.43 | +£43.14 | +£87.38 | −£21.14 |
| £200,000 | +£28.57 | +£57.52 | +£116.51 | −£28.19 |
| £250,000 | +£35.71 | +£71.89 | +£145.64 | −£35.24 |
| £300,000 | +£42.85 | +£86.27 | +£174.77 | −£42.28 |
A quarter point rise on a £200,000 tracker takes the payment from £1,111.66 to £1,140.23, so £28.57 more a month or about £343 a year. Fewer years left or a different starting rate changes the figures, so put your own into the base rate change calculator.
Interest-only mortgages move more
On interest only, the whole payment is interest, so the change is simply balance × change ÷ 12. A quarter point on £200,000 adds £41.67 a month, against £28.57 on repayment. See how interest-only payments are worked out.
If your fixed rate is ending
For most people on a fix, the change that matters is not the next Bank Rate decision but the jump when the deal ends. Say you owe £180,000 with 20 years left and your 2% fix is ending.
| £180,000 over 20 years | Monthly payment |
|---|---|
| At your old 2% fix | £910.59 |
| At a new 4.5% deal | £1,138.77 |
| Difference | +£228.18 |
Lenders usually let you secure a new deal a few months before your current one ends, so it is worth comparing early rather than rolling onto the standard variable rate. The remortgage calculator compares staying with switching, including fees, and our guide to remortgaging and loan to value explains how your rate band is set.
Source: Bank of England, Interest rates and Bank Rate. Checked 1 November 2026.
This is general information, not financial or tax advice.
It explains published rules and figures. Your own position depends on your full circumstances,
so speak to a qualified adviser before acting on it.