Interest-only mortgages: who can still get one?
Interest-only lending did not disappear after the 2014 rule changes. It narrowed. Residential interest-only remains available in 2026 from mainstream lenders, but with income floors, LTV caps and a requirement to prove how you will repay the capital. Here is who qualifies, and what the real cost looks like once you account for the money you have to save alongside.
In this guide
What interest only actually means for your money
On an interest-only mortgage you pay the lender's interest each month and nothing towards the debt. On the last day of the term, you owe exactly what you borrowed.
| Interest only | Repayment | |
|---|---|---|
| Monthly payment | £1,067 | £1,479 |
| Total interest over 25 years | £320,000 | £193,700 |
| Owed at the end | £250,000 | £0 |
| Total cost of the borrowing | £570,000 | £443,700 |
The monthly saving is £412. The lifetime cost is £126,300 higher, and the house is not yours at the end unless you have found £250,000 from somewhere. Model any figures on the interest only calculator.
The honest comparison. To clear £250,000 in 25 years at an assumed 4% investment return, you would need to save about £486 a month alongside the mortgage. Add that to the £1,067 payment and the true monthly commitment is £1,553, higher than the £1,479 repayment mortgage, with investment risk attached. Interest only is only genuinely cheaper if your repayment vehicle beats your mortgage rate, which is not a small assumption.
Lender criteria in 2026
Most mainstream lenders offering residential interest only apply some combination of the following. The exact numbers vary, and a broker with access to the whole market matters more here than almost anywhere else.
- Minimum income. Commonly £75,000 single or £100,000 joint. A few lenders go considerably lower, particularly for part-and-part.
- Maximum LTV of 50 to 75%. Well below what a repayment mortgage would allow. Some lenders cap interest only at 50% and allow the remainder on repayment.
- An evidenced repayment strategy. Not an intention, but evidence. Current statements, projections, valuations.
- Minimum equity requirements where the strategy is to sell the property, often £150,000 to £200,000 of projected equity remaining after sale.
- Periodic reviews. The lender will check during the term that the plan remains on track and will write to you if it does not.
Buy to let is a completely different market. There, interest only is the default, because lending is assessed against rental cover rather than your income and most landlords plan to sell or refinance rather than repay from rent. See the buy to let calculator for those figures.
Acceptable repayment vehicles
| Strategy | Generally accepted? | What the lender wants to see |
|---|---|---|
| Stocks & shares ISA or investment portfolio | Yes | Current value, contribution history, a realistic growth projection |
| Pension tax-free lump sum | Yes | Current fund value, projection, and that you reach 55+ within the term |
| Sale of the mortgaged property | Sometimes | Substantial equity, and a plausible downsizing plan |
| Sale of another property | Yes | Ownership evidence and current valuation |
| Endowment policy | Yes | Latest projection statement |
| Expected inheritance | Rarely | Almost never accepted, too uncertain |
| Cash savings | Sometimes | Evidenced balance and regular contributions |
| Future bonuses | Rarely | Not a strategy in most lenders' eyes |
Part-and-part: the practical compromise
Part-and-part splits the loan: some repays capital and interest, the rest is interest only. It is what many lenders will actually offer a residential borrower who asks for interest only, and it is usually the more sensible product anyway.
| Interest-only portion | Monthly payment | Owed at end of term |
|---|---|---|
| 100% | £1,067 | £250,000 |
| 75% | £1,170 | £187,500 |
| 50% | £1,273 | £125,000 |
| 25% | £1,376 | £62,500 |
| 0% (full repayment) | £1,479 | £0 |
A 50/50 split costs £206 more a month than full interest only and reduces the end-of-term problem from £250,000 to £125,000, a number most people can actually plan around. That trade is worth considering carefully.
If the plan falls short
The lender wants the full balance on the final day. If it is not there, the realistic options are:
- Extend the term. Possible if you are within the lender's maximum age, usually 70 to 75. It buys time and adds interest.
- Switch to repayment. The payment jump is severe if there are few years left, since clearing £250,000 over five years costs roughly £4,700 a month.
- Retirement interest-only or a lifetime mortgage, if you are over 55. These have no fixed end date, but they erode the equity in your home.
- Sell the property. The fallback nobody wants, but it is a real option if there is substantial equity.
Lenders write to interest-only borrowers years in advance for exactly this reason. Engage the first time you get one of those letters, because options narrow considerably as the term end approaches, and the ones available at ten years out are far better than the ones available at eighteen months.
Who it genuinely suits
- Lumpy earners. Contractors, business owners and commission-based professionals who can clear large chunks in good years but want a low fixed monthly commitment.
- Planned downsizers. Older borrowers with substantial equity who intend to sell and buy smaller within the term.
- Defined future lump sums. A maturing investment, a property sale, a pension crystallisation, where the money is identifiable rather than hoped for.
- Landlords. Where the tax and cash-flow arithmetic normally favours it.
It does not suit someone who simply cannot afford the repayment version of the same mortgage. That is the situation the 2014 rules were designed to prevent, and for good reason.
Do this next: work out your figures on the interest only calculator, which shows the monthly payment, the capital still owed and what you would need to save each month to clear it.