Interest-Only Mortgage Calculator
Monthly interest on an interest-only loan, the repayment-mortgage comparison on the same loan, and what's still owed at the end of the term.
Same loan, both bases
Estimate only. Assumes one level rate for the whole term, which real mortgages rarely hold to. Not advice.
The short answer
On an interest-only mortgage you pay only the interest every month, and the amount you borrowed is still owed, in full, on the day the term ends. Nothing comes off the balance on its own — MoneyHelper puts it plainly: you “repay the capital at the end of the mortgage term,” using a repayment plan you, not the lender, are responsible for arranging.
What the calculator shows
Enter the loan, the rate and the term. The interest-only figure is the simplest sum in mortgages: loan × monthly interest rate. Underneath it, the calculator runs the same loan as a standard repayment mortgage so you can see the two monthly payments — and the two very different end-of-term balances — side by side.
Why landlords default to interest-only
A buy-to-let is usually bought to be sold or refinanced eventually, not to be lived in until the mortgage is paid off, and the lower monthly cost improves cash flow and the rent-cover test lenders apply — which is why our buy-to-let mortgage calculator assumes interest-only by default for its affordability maths. That doesn't remove the obligation: the loan is still due, usually met on a buy-to-let by selling the property or remortgaging, both of which depend on the property's value and your ability to borrow again at that point — neither is guaranteed.
The FCA's own numbers on this
This isn't a hypothetical risk. The Financial Conduct Authority's review of interest-only borrowers across the market found “just under half of all interest-only borrowers are modelled as likely to have a shortfall,” with a meaningful share of those shortfalls over £50,000 — against a much higher share of borrowers who told the regulator's researchers they felt confident about repaying. The gap between that confidence and the modelled reality is exactly why lenders now ask what your repayment plan is before approving an interest-only loan, and why it's worth running your own numbers rather than assuming the lower monthly payment is the whole story.
Worked example
A £240,000 loan, 4.5%, 25-year term:
- Interest-only monthly payment: £900 — and £240,000 still owed after 25 years
- Repayment monthly payment on the same loan: roughly £1,334 — and £0 owed at the end
- The £434-a-month difference is, in effect, the cost of eliminating the debt instead of carrying it to the end of the term
Next
Compare a full repayment scenario, including a year-by-year balance table, on the main mortgage calculator. If this is a buy-to-let purchase, check what the rent actually supports on the buy-to-let mortgage calculator, and what the interest costs you against tax on the rental income tax calculator.
MoneyHelper: interest-only and repayment mortgages explained · FCA: findings of its review into interest-only mortgages, read live 12 September 2026. The comparison figures use the standard fixed-rate amortising-loan formula; not a quote from any lender.
Quick answers
Loan amount × annual interest rate ÷ 12. On a £240,000 loan at 4.5%, that's £900 a month, and it stays roughly the same each month as long as the rate and balance don't change — unlike repayment, the balance itself never falls on its own.
The full amount you originally borrowed is due, in one go. MoneyHelper is explicit that you “repay the capital at the end of the mortgage term” using your own repayment plan — savings, investments, or selling or remortgaging the property — not the lender's.
The monthly payment is lower, because none of it reduces the balance. Over the full term it isn't cheaper overall — you pay interest on the full original loan for the whole term instead of a shrinking balance, so total interest paid is usually higher, and you still owe the capital at the end.
Often yes, subject to your lender's criteria and affordability checks at the time — it's a common reason to remortgage. The monthly payment rises immediately to the repayment level for the remaining term, which the calculator above can show you for a shorter remaining term.
No — repayment buy-to-let mortgages exist and some landlords choose them. Interest-only is simply the default assumption lenders and this calculator use for buy-to-let affordability, because it's the far more common structure landlords actually take.
General information, not financial advice — every figure above is an estimate from the numbers you enter, not a mortgage offer. Lenders apply their own criteria, fees and stress tests, which change. Read the full disclaimer.
Sources
The primary documents this page is built from. Links checked 5 September 2026.
- Interest only and repayment mortgages explained — MoneyHelper
- FCA publishes findings of review into interest-only mortgages — Financial Conduct Authority