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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 11th September 2019*

Your guide to interest-only mortgages

We receive hundreds of enquiries from customers looking for mortgage quotes and interest only mortgage information , so we’ve collated a lot of the answers to most commonly asked questions about interest-only mortgage application’s below.

If you have a question we haven’t answered here, please get in touch.

We’ll cover subjects such as –

Where to get the right interest only mortgage advice

There are loads of lenders and even more brokers out there, so how do you know you’ve got the right deal?

It’s important to understand that not all brokers are experienced enough to give the right advice on interest only mortgages, with every lender offering something slightly different, there is a huge range of options.

Interest only mortgage specialists

This is where we come in. We understand that experts already know what is required to work with customers of various backgrounds, whether they need an interest only mortgage, if they are self-employed, have bad credit or for any number of reasons.

What makes a good broker?

It’s a fact of life that not all brokers are created equal. Some will only work with a smaller number of lenders, some will have access to the whole market. Regardless, the experience and knowledge spread across the industry means that some borrowers struggle to get the right advice, even when there are lenders out there for them.

When choosing a broker, you need to be sure they meet certain criteria and ask yourself, are they experienced in –

  • Interest only mortgages
  • Self-employed mortgages
  • Buy to let mortgages
  • Low deposit mortgages
  • Bad credit mortgages
  • Short term mortgages
  • Maximum loan mortgages
  • First time buyer mortgages

There are other things you need to consider, such as –

  • Are they whole of market & independent?
  • Do they offer a reasonable and fair fee structure?
  • Will they offer you access to direct deals?
  • Do they access to exclusive products?
  • Are they whole of market for insurance?
  • Do they have years of experience?

Want the best interest only mortgage? Self-employed? Bad credit? We will find the right interest-only mortgage broker to suit your needs, an expert who arranges these types of mortgage everyday.

The advisors we work with are the some of the best in the business, which is why we are rated 5/5 on Feefo by our customers.

So why use a broker – don’t they cost money?

Yes, brokers charge fees … but they could save you thousands of pounds over the life of your mortgage by finding the best deal for your circumstances.

There are currently over 200 lenders all over the UK and each one is different, offering different deals – can you imagine trying to contact them all to find the best mortgage?

And remember, the advisor you’ll talk to works for the lender and has their best interests at heart, not yours. Even if you make an initial enquiry, they may conduct a hard credit search, which will register on you credit file and may impact your credit rating for up to 12 months.

By contrast, if you use a broker who has access to every lender, then you have a much better chance of securing the best mortgage to suit your circumstances.

Also remember that the broker is working for you, not the lender and has a duty of care to make sure end up with a mortgage that is right for you.  In fact, some have access to ‘broker exclusive’ offers than can be substantially better than going direct.

The advisors we work with have helped over 45,000 people get a mortgage

The brokers we work with must have completed our officially recognised London Institute of Banking & Finance (LIBF) Accredited Development Program, which consists of 25 modules of pure, specialist mortgage knowledge. Those that fail, simply cannot work with us.

To date, we’ve helped over 45,000 people from all walks of life find the perfect mortgage, including many who may have had a mortgage declined or refused, usually because they didn’t get the right advice.

Can I get an interest only mortgage online quote?

You can get a good indication; but remember that online comparison tables for loans and rates offered won’t give interest-only mortgage advice suited to your particular situation.

Hours can be wasted comparing mortgages you don’t qualify for –  you need an expert to get the right advice. Send an enquiry to us right now and we’ll help.

How to get an interest-only mortgage

Get in touch with us and we will refer you to a specialist interest-only mortgage advisor.

Have solid evidence of your planned repayment vehicle (as outlined above), as well as the deposit money ready (unless it’s a rare no-deposit mortgage).

Your enquiry will be put through from us to a whole-of-market advisor, who will look at your particular financial situation and then research best options for you.

Interest only mortgage Application process – in 10 simple steps

Step 1 Decide what you can afford for the deposit and the monthly mortgage payments
Step 2 Gather evidence to support your application: ID, bank statements, income proof, etc
Step 3 Contact us and we will refer you to a specialist mortgage broker to suit your needs.
Step 4 The broker will search the market to find the best mortgage deal for your situation
Step 5 A lender will offer an Agreement in Principle following the broker’s approach
Step 6 You send the broker docs as supporting evidence and a full application is submitted
Step 7 The lender arranges a valuation of the property & your solicitor conducts searches
Step 8 An official offer for the mortgage loan is made to you via your mortgage broker
Step 9 Your solicitor requests funds from the lender & all monies go to the seller’s solicitor
Step 10 A completion date is set for contracts to be exchanged – and you get the keys!

How to qualify on an interest only mortgage Application

There are two main factors when it comes to being approved for an interest only mortgage:

  • Deposit / LTV (typically most lenders will offer interest only mortgages to 75% LTV, some will consider up to 80%, and a few up to 85% in the right circumstances. It is also possible to split part repayment and part interest only)
  • Repayment vehicle (lenders will require the borrower to evidence that they can repay the money before the end of the term, using a suitable repayment vehicle – more info on this below)

Borrowers of course will still need to meet standard criteria for income and affordability, credit history, property type etc. as explained further in this guide.

Get the right advice from an interest only mortgage specialist

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 11th September 2019
OnlineMortgageAdvisor 2020 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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.

Find out more about Interest Only Mortgages

Interest Only Mortgages