Jump to main content of pageaccessibility informationSitemap
28 May 2024

Virgin Mortgage Calculator
HSBC Mortgages
Nationwide Mortgage Rates
Aviva Mortgage Life Insurance
Barclays Mortgage Calculator

Interest Only Mortgages Explained

What is an Interest Only Mortgage?

An Interest only mortgages require you to make monthly payments to the mortgage lender in order to pay off the interest on the amount borrowed. In addition to the interest only mortgage you need to establish a separate long term repayment strategy.

This could include an investment plan, inheritance or disposing of the property in the future.

The investment plan required to pay off the mortgage usually comes in one of three forms; an ISA (individual savings plan), a pension or an endowment. This investment does not have to be provided by the mortgage lender.

Interest only mortgages can also be changed to a repayment mortgage in the future. Though it is with noting that main lenders have tightened their criteria in recent years regarding interest only mortgages. It is important to seek advice if you are looking as this as an option.

Pros and Cons of Interest only Mortgages


  • You can choose an 'investment vehicle' that is tax efficient.
  • If the investment growth rate exceeds those estimated at outset you may be able to pay off your mortgage early or receive a lump sum at the end of the repayment period, in addition to paying off your mortgage.



  • No guarantee that you will have sufficient funds to pay off the mortgage at the end of the repayment period, as the investment could perform below that assumed at the start.
  • No all mortgage lenders now offer interest only mortgages.
  • Most Lenders have strict criteria such as min income and equity
  • Your debt remains constant throughout the mortgage period.
  • Some forms of investment may incur a penalty fee if you stop paying premiums.


Discounted Interest Only Mortgage Protection Insurance

On interest only mortgage protection insurance cover, critical illness insurance cover and permanent health insurance cover Go Direct rebate a minimum 50% of the initial commission that the provider would have paid to us back into your policy reducing the cost of your monthly insurance premiums. Get an instant interest only mortgage life insurance protection quote today from Go Direct.

Do you want fee free Interest only mortgage advice ?

For UK Interest Only Mortgage or remortgage advise please feel free to contact us for independent mortgage advice from a professional mortgage advisor.

You may also be interested in:

We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £349


Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

Go Direct.co.uk is a trading style for website purposes of Go Direct UK Ltd.

Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600

We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £349

Types of Mortgage | Best Mortgage Type | Mortgage Repayment Guide | Remortgage Guide | Life Insurance | Mortgage Protection Life Insurance | Decreasing Term Life Insurance | Accident Sickness Unemployment |Accident Sickness Unemployment Cover | Builds and contents quote |Conveyancing Online

Interest Only Mortgages Explained by godirect.co.uk - Find out What is an Interest Only Mortgage?