How the interest-only mortgage calculator works
With an interest-only mortgage your monthly payment covers just the interest. None of it goes towards the loan itself, so the balance stays the same for the whole term and has to be repaid in one go at the end. That makes the monthly payment much lower than a repayment mortgage, but the total cost much higher.
Repayment payment = P × r ÷ (1 − (1 + r)−n)
The calculator works out both, adds up the total interest over the term, and shows the balance still owed at the end. It also works out how much you'd need to save every month, at the growth rate you choose, to have the full balance ready when the mortgage ends.
If you set the interest-only part below 100%, you get a part-and-part mortgage. That share stays on interest-only and the rest is repaid normally, so you owe less at the end.
Worked example: £200,000 over 25 years at 4.5%
| Interest-only | Repayment | |
|---|---|---|
| Monthly payment | £750.00 | £1,111.66 |
| Total interest | £225,000 | £133,499 |
| Owed after 25 years | £200,000 | £0 |
| Total cost | £425,000 | £333,499 |
Interest-only saves £361.66 a month, but you pay £91,501 more in interest and still owe £200,000. To have £200,000 ready in 25 years you'd need to save about £389.01 a month at 4% growth, making the real monthly cost £1,139.01, more than the repayment mortgage.
A 50/50 part-and-part mortgage on the same loan costs £930.83 a month. You pay £179,250 in interest and owe £100,000 at the end, which you could build up by saving £194.50 a month at 4%.
Who can get an interest-only mortgage?
For a home you live in, lenders must check you have a credible way to repay the loan at the end, known as a repayment strategy. Common ones are:
- Investments such as stocks and shares ISAs or a pension lump sum
- Selling the property and downsizing, usually only accepted with plenty of equity
- Selling other property, or an expected inheritance in some cases
Because of this, residential interest-only deals usually need a bigger deposit and a higher income than repayment mortgages. For landlords it's different: most buy-to-let mortgages are interest-only, and the plan is normally to sell the property. See the buy-to-let mortgage calculator for rental cover tests.
Risks to think about
- Investment shortfall. If your savings grow by less than expected, you could be left short. At 2% growth instead of 4% the saving needed rises from £389 to £514 a month.
- House prices. If you plan to sell and prices have fallen, there may be less left after clearing the loan.
- Rate rises. Each 1% rise adds £167 a month to the interest on £200,000.
If you're on interest-only now and worried about the end of the term, speak to your lender early. Switching part of the balance to repayment, or overpaying, both cut what you'll owe. Try the mortgage overpayment calculator or the full mortgage calculator.
Frequently asked questions
How much is a £200,000 interest-only mortgage per month?
At 4.5% a £200,000 interest-only mortgage costs £750 a month, compared with £1,111.66 on repayment over 25 years. At 5% the interest-only payment is £833.33.
What happens at the end of an interest-only mortgage?
You must repay the whole amount you borrowed in one go. Most people use savings or investments, sell the property, or remortgage onto a repayment deal if a lender will accept them.
How do you calculate interest-only mortgage payments?
Multiply the loan by the yearly interest rate and divide by 12. £150,000 at 5% is £150,000 × 0.05 ÷ 12 = £625 a month.
What is a part-and-part mortgage?
It splits the loan, with one part on interest-only and the rest on repayment. On £200,000 at 4.5% over 25 years, a 50/50 split costs £930.83 a month and leaves £100,000 to repay at the end.
Is interest-only cheaper than repayment?
Only month to month. Over 25 years at 4.5% interest-only costs £91,501 more in interest on £200,000, and you still owe the full loan at the end.
Last reviewed October 2026 using 2026/27 figures. This calculator gives an estimate for guidance only.