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Interest-only mortgage calculator

An interest-only mortgage costs less each month because you pay only the interest. The full loan is still owed at the end of the term. Enter your mortgage to see the monthly payment, what a repayment mortgage would cost, and how much you would need to save each month to clear the loan.

Checked 22 October 2026.

This calculator is for a residential mortgage where all of the loan is interest-only. It does not cover part and part, buy-to-let tax or lifetime mortgages. For rental properties use the buy-to-let mortgage calculator.
£

How much you borrow.

% a year

The yearly rate on your mortgage.

years

How long the mortgage lasts.

£

Used to show loan-to-value. Leave blank to skip.

% a year

What your savings or investments might earn each year after charges. This is an assumption, not a promise.

Interest-only monthly payment

£833.33

With these assumptions, paying the interest and saving to repay the loan costs £57.20 a month more than a repayment mortgage.

Repayment mortgage monthly payment
£1,169.18
Monthly difference
£335.85
Balance still owed at the end
£200,000.00
Total interest, interest-only
£250,000.00
Total interest, repayment
£150,754.02
Extra interest paid
£99,245.98
Monthly saving to repay the loan
£393.04
Interest plus saving, per month
£1,226.38
Loan-to-value
66.67%
Show the working
  1. Monthly rate = yearly rate ÷ 12 ÷ 100.
  2. Interest-only payment = mortgage × monthly rate = £833.33.
  3. Repayment payment = mortgage × monthly rate ÷ (1 − (1 + monthly rate) to the power of minus the months) = £1,169.18. At 0% it is the mortgage ÷ months.
  4. Total interest, interest-only = interest-only payment × months = £250,000.00.
  5. Total interest, repayment = repayment payment × months − mortgage = £150,754.02.
  6. Extra interest = the difference of those two totals = £99,245.98.
  7. Balance still owed at the end = the amount borrowed = £200,000.00.
  8. Monthly growth = (1 + yearly growth) to the power of 1/12, minus 1.
  9. Monthly saving, paid at the end of each month = mortgage × monthly growth ÷ ((1 + monthly growth) to the power of months − 1) = £393.04. At 0% growth it is the mortgage ÷ months.
  10. Interest plus saving = interest-only payment + monthly saving = £1,226.38.
  11. The comparison uses both monthly costs after rounding each to the nearest penny.
  12. Loan-to-value = mortgage ÷ property value × 100 = 66.67%.

What is an interest-only mortgage?

With an interest-only mortgage your monthly payments cover only the interest. They do not reduce the amount you borrowed, so you still owe the full loan when the term ends. You are responsible for having a plan to repay it, using savings, investments or other assets.

How much does an interest-only mortgage cost each month?

The monthly payment is the loan multiplied by the yearly rate, divided by 12. A repayment mortgage costs more each month because it also pays off the loan. The table shows both for a £100,000 loan over 25 years.

Monthly payment on £100,000 over 25 years
Interest rateInterest-onlyRepaymentDifference
3%£250.00£474.21£224.21
4%£333.33£527.84£194.50
5%£416.67£584.59£167.92
6%£500.00£644.30£144.30
7%£583.33£706.78£123.45

Repayment figures use the same monthly method as the calculator.

What do you owe at the end of an interest-only mortgage?

You owe the whole amount you borrowed. A £250,000 interest-only mortgage over 25 years means repaying the full £250,000 when the term ends, however much interest you paid along the way. Do not rely on house prices rising or on a future windfall to cover it.

How much would you need to save each month to repay the loan?

With no growth, divide the loan by the months in the term. With growth, the amount needed is lower. The calculator assumes your plan grows at a steady yearly rate with a payment at the end of each month. Real investments rise and fall, so treat the result as a guide.

Monthly saving needed to reach £100,000 in 25 years
Yearly growthMonthly saving
0%£333.33
2%£257.82
4%£196.52
6%£147.87

Growth is a yearly rate after charges. It is an assumption, not a promise.

What counts as a repayment plan?

MoneyHelper lists cash saved in a savings account or ISA (some lenders no longer accept this), a stocks and shares ISA, pensions, investment bonds, shares and unit trusts, regular savings plans such as endowment policies, and other properties or assets. Ask your lender what it accepts.

Will a lender check your repayment plan?

Yes. MoneyHelper says your lender will check at least once during the term that your plan is on track, and it decides whether your plan looks likely to repay the loan. The FCA consulted on changes to interest-only rules in 2026 (CP26/18). They are proposals until the FCA publishes final rules.

What if you have no plan to repay the loan?

Speak to your lender or adviser early. The FCA lists options such as switching to a repayment mortgage over the remaining term, extending the term, or repaying part of the loan and switching the rest to repayment. Without a plan, MoneyHelper warns it may be harder to remortgage.

Common questions

Is an interest-only mortgage cheaper than a repayment mortgage?

It costs less each month, but you owe the full loan at the end and still need money to repay it. With the calculator's starting figures (£200,000, 5%, 25 years, 4% growth), the interest plus saving comes to £1,226.38 a month, against £1,169.18 for a repayment mortgage. Your result depends on your rate, term and growth.

Can a lender make me repay an interest-only mortgage early?

The FCA says that unless you break your mortgage contract, for example by missing payments, no one can make you pay back an interest-only loan before the end of the term. You still need a plan for the end.

What happens at the end of an interest-only mortgage?

You must repay the full amount you borrowed. If you cannot, you may have to sell the property, or agree a change with your lender such as a repayment mortgage or a longer term. The FCA says acting early gives you more options.

Can I rely on house price rises to repay the loan?

No. MoneyHelper says you should not rely on property prices rising or on a future windfall such as an inheritance or bonus. Lenders want a plan that is likely to repay the loan.

Does this calculator work for buy-to-let?

No. It assumes a residential mortgage with all of the loan on interest-only. Use the buy-to-let mortgage calculator for rental properties.

Which interest rate should I use?

Use the rate on your mortgage offer or illustration. The calculator uses one rate for the whole term, so it cannot show a rate change after a fixed period. Check the result again if your rate changes.

How is the repayment mortgage figure worked out?

It uses the standard repayment formula with a monthly rate of the yearly rate divided by 12. Lenders may calculate interest differently, so your lender's figure may differ slightly.

Sources

Checked 22 October 2026:

Nothing you enter leaves your device. Not mortgage or financial advice. Speak to a regulated mortgage adviser. Your home may be repossessed if you do not keep up repayments on your mortgage.