Interest-Only vs Repayment Calculator
Compare the monthly payment on interest-only against a standard repayment mortgage — and the total-cost truth: interest-only feels cheaper every month, but you still owe the full balance at the end.
Not financial advice. This is an estimate — representative figures, not financial advice. Actual mortgage terms, lender policies on interest-only switches, and your Mortgage Charter eligibility may differ. If you're worried about affording your mortgage, free, independent help is available from MoneyHelper (moneyhelper.org.uk) and StepChange (stepchange.org).
Interest-only is breathing room, not a saving
Interest-only costs £335.85 less a month — but at the end of the 25-year term you'd still owe the full £200,000, on top of £249,999 in interest already paid. It only makes sense with a clear, funded plan to repay the balance.
Total repaid: £350,754
Still owed at the end of the term: £200,000
On interest-only, you pay £249,999 in interest over 25 years — and at the end of the term you still owe the full £200,000. Counting both, interest-only's true total cost is £449,999, compared with £350,754 to fully own the property on repayment.
Before you switch to interest-only
- Under the Mortgage Charter, eligible borrowers can switch to interest-only for up to 6 months without a full affordability check and without it affecting their credit file — check with your lender whether this still applies to your situation.
- If you take a temporary interest-only break, consider overpaying once you're back on repayment (where your mortgage terms allow it) to help catch back up on the principal you didn't pay down during the break.
- Interest-only only works with a credible, funded repayment vehicle — savings, investments, or a plan to downsize — agreed and reviewed well before the end of the term, not figured out at the last minute.
How this comparison is calculated
The repayment monthly payment uses the standard mortgage annuity formula — a level payment that clears both interest and principal over the term. The interest-only monthly payment is simply the balance multiplied by the monthly interest rate — since none of the balance is ever repaid, this payment stays exactly the same every month, and the total interest is just that payment multiplied by the number of months. The temporary-switch scenario assumes N months of interest-only from the start of the mortgage (the balance doesn't move during that time), then a new, higher repayment amount recalculated over the shortened remaining term so the mortgage still clears on the original end date — the extra interest this causes is the difference between that total and a standard, unbroken repayment mortgage over the same overall term.