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Mortgage Advisor & Director
If you are applying for an interest-only mortgage, or considering one, it’s a good idea to do some calculations before you begin. Here you can find a mortgage repayment calculator that returns interest-only results and plan your next steps.
What is an interest-only mortgage calculator?
An interest-only mortgage calculator is a digital tool you can use to work out how much your mortgage repayments will be each month and overall, if you were to borrow the amount you need on an interest-only basis. You can find one of these calculators below.
You can use this calculator to compare different interest rates, term lengths and mortgage amounts. You can also convert the results to show capital repayment calculations.
How does this calculator work?
Our interest-only mortgage calculator takes the loan amount you enter and works out how much monthly interest you would pay on a mortgage of that size, taken over the term length you select. It also displays the overall amount you will repay by the end of the term.
Selecting the check box for ‘Repayment’ will display results for a capital repayment mortgage of the same amount, so you can compare the two outputs.
Certain mortgage lenders will allow you to make option capital repayments on an interest-only mortgage to reduce the debt owed at the end of the term. Some will also let you take out a portion of the mortgage on capital repayment and the rest on interest-only.
Mortgages that combine both repayment types can be complex - speak to one of our mortgage brokers for bespoke calculations if you are considering this option.
Example calculations
The tables below show example calculations for interest-only mortgages so you can see how they differ based on the main factors that affect mortgage repayments.
Different mortgage amounts
This table shows example repayments for interest-only mortgages between £100k and £500k. We have used an example mortgage rate of 5% and a term length of 25 years for example purposes as these are representative of current market conditions.
|
Mortgage Amount |
Monthly Repayments |
Overall Repayments |
|
£417 |
£225,000 |
|
|
£625 |
£337,500 |
|
|
£833 |
£450,000 |
|
|
£1,042 |
£562,500 |
|
|
£1,250 |
£675,000 |
|
|
£1,458 |
£787,500 |
|
|
£1,667 |
£900,000 |
|
|
£1,875 |
£1,012,500 |
|
|
£2,083 |
£1,125,000 |
Term lengths
This table shows the impact of term lengths on an interest-only mortgage. We have used an example mortgage amount of £185,000 as this is roughly the average loan size in the UK at the time of writing (December 2024), and an example interest rate of 5%.
|
Mortgage Amount |
Term Length |
Monthly Repayments |
Overall Repayment |
|
£185k |
10 years |
£771 |
£277,500 |
|
£185k |
15 years |
£771 |
£323,750 |
|
£185k |
20 years |
£771 |
£370,000 |
|
£185k |
25 years |
£771 |
£416,250 |
|
£185k |
30 years |
£771 |
£462,500 |
|
£185k |
35 years |
£771 |
£508,750 |
|
£185k |
40 years |
£771 |
£555,000 |
As you can see, the monthly payments on an interest-only mortgage are consistent but the overall amount payable with the capital debt included is higher when stretched over a longer term.
Interest rates
This table shows the impact of the interest rate you qualify for on your interest-only mortgage repayments. The lender will determine your rate based on the loan-to-value (LTV) ratio, the type of mortgage you choose and the overall strength of your application. Rates can sometimes be higher for interest-only mortgages, but this is not always the case.
|
Mortgage Amount |
Interest Rate |
Monthly Repayments |
Overall Repayment |
|
£185k |
3% |
£463 |
£323,750 |
|
£185k |
3.5% |
£540 |
£346,875 |
|
£185k |
4% |
£617 |
£370,000 |
|
£185k |
4.5% |
£694 |
£393,125 |
|
£185k |
5% |
£771 |
£416,250 |
|
£185k |
5.5% |
£848 |
£439,375 |
|
£185k |
6% |
£925 |
£462,500 |
Interest-only vs capital repayment
The table below shows how the monthly repayments on different mortgage amounts compare when taken on an interest-only basis versus capital repayment. An example interest rate of 5% and a term length of 25 years was used for these calculations.
|
Mortgage Amount |
Monthly Repayments (Interest Only) |
Monthly Repayments (Capital Repayment) |
|
£100k |
£417 |
£585 |
|
£150k |
£625 |
£877 |
|
£200k |
£833 |
£1,169 |
|
£250k |
£1,042 |
£1,461 |
|
£300k |
£1,250 |
£1,754 |
|
£350k |
£1,458 |
£2,046 |
|
£400k |
£1,667 |
£2,338 |
|
£450k |
£1,875 |
£2,631 |
|
£500k |
£2,083 |
£2,923 |
What to do after running your calculations
Now that you have a better idea of how much your interest-only mortgage will cost each month, you now have two options. You can source a mortgage deal yourself for free on Teito, or you can speak to one of our expert brokers for advice about your next step.
Pick an option below to take the next step on your mortgage journey with us:
Calculations all done? Here are your options now...
How much can you borrow on an interest-only mortgage?
For an interest-only mortgage you can generally borrow up to 75% of the property’s value (75% LTV). Affordability for this will be based on a multiple of your salary, with most lenders capping your maximum loan size at 4-4.5 times income, and a few stretching to 5-5.5 times.
Use our mortgage affordability calculator below to get an idea of your maximum borrowing:
Things to consider
Here are some points to consider when running your interest-only mortgage calculations:
- You will need a repayment vehicle: When crunching those numbers, be sure to factor in a repayment plan for the end of the term. Research which repayment vehicles are accepted by lenders and speak to a broker about the risks involved.
- Be aware of other costs: While interest-only mortgages come with lower monthly payments, be aware of the other costs and fees the mortgage process includes, such as product fees, valuation fees, legal costs and mortgage broker fees.
- Income requirements: Interest-only mortgages can have higher minimum income requirements than capital repayment, with some lenders only offering this repayment option to borrowers who earn between £25,000 and £50,000 per year.
Why choose Teito for your mortgage needs?
Now that you have a clearer understanding of how much an interest-only mortgage will cost, you can compare the latest rates on them for free on Teito, or take advantage of a free, no-obligation chat with a member of our team who specialises in this area.
Here are just some of the reasons why you should choose Teito:
- You can browse the latest mortgage rates for free
- Our brokers can access exclusive interest-only deals
- We are 5-star rated on leading review websites
- You can secure an agreement in principle in minutes
Ready to compare interest only mortgage rates and deals for free, and speak to a broker who specialises in this type of finance? Get started here.
FAQs
They are calculated in exactly the same way as they are for an interest-only residential mortgage, but keep in mind that interest rates are usually higher for buy-to-let.
You can use our interest-only mortgage repayment calculator to work out the repayments for this mortgage type, but our affordability calculator is for residential only.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.