Continue your plan
Useful next calculations
Rates & sources
Interest-only payments cover interest but do not reduce the capital. The full original balance remains due unless separate capital repayments are made.
| Band / figure | Rate |
|---|---|
| Monthly formula | balance × rate ÷ 12 |
| Capital reduction | none |
| Repayment strategy | required by lender |
Source: MoneyHelper — repaying an interest-only mortgage — check the linked guidance and any live quote before acting.
When to use this calculator
- Before comparing mortgage products, brokers or repayment types.
- When you want to test how a different deposit, rate or term changes the payment.
- When you need a quick estimate before using a formal illustration or agreement in principle.
- When you are stress-testing your budget against a higher rate.
Example: separating the interest payment from the capital plan
Use these sample inputs as a quick scenario test, then change one variable at a time to compare outcomes.
| Input | Value |
|---|---|
| Mortgage balance | £240,000 |
| Interest rate | 5.25% |
| Mortgage term | 25 years |
| Capital due at the end | £240,000 |
The monthly figure covers interest only. Compare it with a repayment mortgage and calculate how much must be set aside each month to build a realistic route to repaying the unchanged capital balance.
How to read your results
Monthly Payment
Estimated monthly mortgage repayment under the rate, term and balance you entered. Compare it with a lender illustration before you apply.
Total Interest
Additional amount paid above the original principal during the term, using the rate you entered. Fees and early-repayment charges are not included unless you added them.
Capital Due
The figure produced by this output for the inputs you entered. Change one variable at a time if you want to see what drives it.
Method & assumptionsAuthoritative sources
An interest-only mortgage means your monthly payment covers only the interest charged on the outstanding loan — the original capital remains unchanged throughout the term and must be repaid in full at the end. This calculator computes the monthly interest charge by applying the annual rate (divided by 12) to the full loan balance, which remains constant because no capital is being repaid. In practice, the interest rate on your mortgage will likely change over time as fixed or tracker periods end and you remortgage, so the real cost will fluctuate. The calculator does not model the performance of any associated repayment vehicle. lenders require a verified, independent repayment strategy before granting an interest-only loan; the financial regulator mandates regular contact between lenders and borrowers to monitor repayment plans throughout the mortgage term.
Common mistakes
- !Mixing up loan amount and property value, which can distort affordability and LTV.
- !Using a headline rate but forgetting fees, insurance, taxes or repayment type.
- !Testing only one term length instead of comparing the payment and total cost together.
- !Forgetting that a repayment mortgage and an interest-only mortgage produce very different monthly figures.
What to do next
- Write down the full capital balance and term-end date rather than focusing only on the monthly interest payment.
- Stress-test the payment at a higher rate and check whether the separate repayment strategy remains affordable.
- Compare the same loan with a repayment mortgage and discuss any shortfall with the lender or a regulated mortgage adviser early.
Frequently asked
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