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One application for everyone. Great credit, credit-challenged or somewhere in between, with our interest only mortgages, everyone fills out the same application. It’s one form for everyone. It’s that simple.

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Why get an interest only mortgage?

An interest-only mortgage allows for you to only pay the interest each month during the loan term.

The term ends and you don’t have the obligation to repay the loan amount.

With an interest-only mortgage, your monthly payment pays only the interest charges on your loan, not any of the original capital borrowed.

This means your payments will be less than on a repayment mortgage, but at the end of the term, you’ll still owe the original amount you borrowed from the lender.

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What is the difference between interest-only mortgages and repayment mortgages?

There are two options to repay your mortgage

  • Repayment
  • Interest-only

Repayment mortgages allow you to pay back a portion of the loan each month and the interest. If you make all of your payments, you are guaranteed to repay the entire loan by the end.

An interest-only mortgage allows you only to pay the interest. You’ll still owe what you borrowed at the end of the term.

History of interest-only mortgages

The 2008 financial crisis saw an interest-only lending boom.

Customers could borrow on an interest-only basis without showing lenders how they would repay the debt. It was discovered that many thousands of customers who were only interested in borrowing money would have difficulty paying off their home loans later.

It’s very difficult to borrow money on an interest-only basis. Some lenders don’t offer interest-only loans. Others will require a deposit and a repayment plan to repay the capital.

Buy-to-let is the exception. Lenders generally allow landlords to pay their mortgages in interest only.

You can either sell your property or take out a new loan if you cannot repay the amount borrowed.

You can borrow from as little as £50,000
Available from mainstream lenders to private investments
Short to long repayment terms available
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How to repay

Interest-only repayment plans and how to pay back your loan

Your mortgage lender will require you to approve a repayment plan before lending money to you on an interest-only basis. While acceptable repayment plans vary from lender to lender, they may include ISAs or stock market investments. Your lender will likely conduct periodic checks to ensure that you are on track to repay the amount.

Lenders used to allow borrowers to count on the possibility that they would receive a future windfall, such as an inheritance or bonus. But very few people will now accept this. To make monthly payments more affordable, you can remortgage for a lower mortgage rate or switch to a repayment loan.

You should act immediately if you are concerned about the repayment of an interest-only mortgage amount. You will have fewer options if you delay repaying the interest-only mortgage. It is essential to get financial advice as soon as possible.

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The Loan Corp Guarantee

We offer a wide range of interest-only mortgages in the UK, of which we guarantee to help you source the best interest-only mortgages and products tailored to your requirements. If we can not help, then it is unlikely that anyone else can.

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Our Guide

Advice on interest only mortgages