Interest-only mortgage calculator
Interest only keeps the monthly payment low, but the loan never shrinks. See the payment, the comparison with repayment, and the saving needed to clear it.
How this is calculated
The interest-only payment is the loan times the interest rate, divided by twelve.
The repayment payment is the standard repayment mortgage calculation over the same term, for comparison.
The saving needed is the monthly amount that would grow to the full loan by the end of the term at the growth rate you enter.
Rates used · 2026/27
| Interest-only payment | loan times rate, divided by 12 |
| Owed at the end | the full amount borrowed |
| Repayment plan | needed by most lenders |
| Comparison | a repayment mortgage on the same terms |
Last checked July 2026. Source: HMRC and gov.uk.
Worked example
On £200,000 at 4.5% over 25 years, interest only costs £750 a month against £1,111.66 on repayment, but the full £200,000 is still owed at the end. Saving £389.01 a month at 4% would build enough to clear it.
Common questions
How does an interest-only mortgage work?
Your payments cover only the interest, so the balance stays the same. At the end of the term you repay the whole loan in one go.
Can I switch from interest only to repayment?
Usually yes, if you pass the lender's affordability checks for the higher payment.
Is buy-to-let usually interest only?
Many buy-to-let mortgages are, because landlords often plan to repay from the sale of the property.
What if I cannot repay at the end?
Talk to the lender early. Options can include extending the term, switching to repayment or selling the property.