When might an interest-only mortgage be suitable?

Prior to the 2008 financial crisis, interest-only mortgages were mainstream. This was predicated on the belief that prices would only ever increase, so the mortgage holder would build up equity in time and realise that in a sale. The credit crunch put an end to that theory and interest-only suddenly became a rare and niche product because lenders viewed it as high risk.

However, it is still a very useful mortgage in several situations, which we will touch on here.


What are the advantages of an interest-only mortgage?

What are the disadvantages of an interest-only mortgage?

If you’re thinking about getting this type of mortgage loan, you may want to consider these aspects too:

How can you pay off an interest-only mortgage?

Options to pay off the loan could include selling the property, switching to a repayment mortgage, making over-payments, or saving and investing elsewhere. Whichever route you choose, make sure you review your plan regularly, so that you know it will cover the amount you need when the time comes.

How can a mortgage adviser help?

A mortgage broker has access to all mortgage lenders, many have set rules on interest only lending with restrictions on age, income, loan to value, minimum equity and a set repayment vehicle- sale and downsize is not an acceptable exit route for some lenders. We are able to advise on whether an interest only mortgage is suitable, check understanding of how this is to be repaid and place with the correct lender to match those needs.

There are a lot of people with interest only mortgages that may be coming to an end soon without a repayment strategy. We can help clients to understand their long-term plans and try to source longer term mortgage options for them.

Don’t leave it too late though! It’s important not to wait until a couple of months before the interest only balance is due as the lenders will be expecting the debt to be repaid and this will reduce your options.


Your home may be repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not regulate most forms of buy to let mortgages.