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Interest-Only Mortgage Lenders

See how expert guidance could help secure your interest only mortgage and ensure it's the right option for you

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 19, 2021

We receive many enquiries about interest-only mortgages. A high number of customers have approached us in 2019 to ask which interest-only mortgage providers are available in the UK and what criteria they need to obtain one.

While lenders’ product offerings are ever-changing, rest assured that there are a number of interest-only mortgage lenders in the UK, and the advisors we work with are best placed to find you the most suitable provider for your needs.

Who offers interest-only mortgages?

There are a number of interest-only (IO) mortgage companies available on the market, although many are more wary about offering this product nowadays.

What eligibility requirements do interest only mortgage lenders have?

In order to be considered for an interest-only mortgage by any lender, you will typically have to fulfill the following criteria:

Interest only lenders’ deposit / loan to value (LTV) requirements

larger deposit is required with IO mortgages than with repayment plans. The maximum LTV is usually around 75% (depending on the terms of the plan), although some lenders may be stricter, and others slightly more lenient.

For example, HSBC, Lloyds, Post Office and Barclays offer IO mortgages at a maximum of 75% LTV, but requirements vary depending on the term length and/or the amount you’re borrowing.

Interest only lenders will insist that you have a repayment vehicle

Due to the repayment structure of interest-only plans, most providers require customers to have some form of repayment vehicle in place to repay the loan, such as a savings plan or other investments. However, some lenders will accept the sale of a property as the repayment strategy, but it all depends on your personal circumstances and the amount of available equity.

Some banks such as Barclays request that you seek independent financial advice on your repayment plan before applying for an IO mortgage. Others, including Halifax and Santander, may ask you to demonstrate that your repayment plan(s) are on track during the term period.

While you may fulfill both criteria, it doesn’t necessarily mean your mortgage application will be accepted. All providers will have additional criteria you need to meet, so it’s best to speak to an expert to find out exactly what these are and whether you’re eligible.

Are there interest only residential mortgage lenders?

Yes. While many of the customers we speak to are looking for buy-to-let (BTL) interest-only mortgages (the most common repayment method for BTL borrowing), others are seeking residential mortgages on an interest-only basis.

Although not as common as they used to be, there are still a number of high street banks and niche providers offering residential interest-only mortgages, assuming you meet their eligibility criteria.

As the number of lenders offering this product is dwindling, it’s advisable to seek expert advice if you want access to the most competitive rates on the market.

Where can I get an interest-only mortgage?

While you may well be able to secure an interest-only mortgage by speaking to your current lender, most experts do not recommend this.

If you approach a lender directly, your options are limited to the deals they’re offering. You may receive biased advice, and it might not be to be the most suitable option for your individual needs.

If you approach multiple lenders in an attempt to secure the best deal, you run the risk of adversely affecting your credit score by making too many applications in a short space of time.

Lots of people turn to online calculators or comparison sites to find the best interest rates, but again, this is not advised. Often these tools neglect to factor in all your circumstances, meaning you could end up opting for an unsuitable product.

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Where can I find the best interest-only mortgage lenders in the UK?

The specialists we work with will not only scour the entire market quickly to identify all available products, some of them may be able to offer you exclusive interest-only deals which are not available to the general public.

Working with us means you will only ever be paired with lenders that are suitable for your circumstances, meaning you’re less likely to commit to a product which later on proves unviable..

Get expert advice on finding an interest-only mortgage provider

To find out which UK providers are best placed to offer you an interest-only mortgage on your property, contact Online Mortgage Advisor.

We’re here to offer expert advice with no fee or obligation on your part, so give us a call on 0808 189 2301 or make an enquiry and we’ll get to work on identifying the most suitable broker for you.

We only work with accredited, whole-of-market brokers, who have been consistently rated 5 stars on Feefo for advice and quality of service by our existing customers.

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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