Best interest-only mortgage rates

If you’re searching for a way to reduce your mortgage monthly repayments and are seeking more financial freedom, then look no further than interest-only mortgages. Unlike repayment mortgages, where every month you pay off both the interest and the capital on the loan, with an interest-only mortgage all that is required of you is paying just the interest due each month. This will drastically decrease your regular payments while still owing full amount at term’s end.

Interest-only mortgages have many potential advantages. Your saved monthly repayments can be invested in stocks, property, or other securities of your choosing. People with inconsistent incomes may prefer to make overpayments when it best suits them and control the timeline for repaying capital. Additionally, forecasted assets like an inheritance or pension could possibly assist you in settling the mortgage.

Despite the benefits of interest-only mortgages, there are some significant risks and obstacles to consider. Above all else, you must have a clear plan for repaying your loan at the end of its term or face being unable to keep up with monthly payments – potentially resulting in foreclosure or having to sell your home. Additionally, it is essential that you stay informed about applicable rates and fees as they could drastically affect what you owe down the line.

Read our guide which will explain everything you need to know about mortgages on an interest-only payment basis.

Top UK lenders that offer the best rates for interest only mortgages

Below we list the best interest only mortgage rates across some of the best mortgage lenders in the UK. These are at the time of writing on 15th March 2023, rates are subject to change and will differ depending on your personal financial situation.

If you’re in the UK and on the hunt for an interest-only mortgage, these lenders have been applauded by customers based on their ratings and reviews:

• Coventry Building Society
• Barclays
• Halifax
• HSBC
• Nationwide Building Society
• NatWest
• Santander
• Virgin Money
• Yorkshire Building Society

You can either continue reading to learn more about each of the lenders interest only mortgage rates or view them in the table below where we have collated each lenders rates.

Interest only mortgages Coventry Building Society

Coventry Building Society offers interest-only mortgages for residential properties, where you just pay the monthly interest and not the principal amount. However, one must have a repayment scheme to return the entire loan at maturity. The rates differ depending on your credit score in addition to other factors like type of mortgage, term length and loan-to-value ratio.

Below are the interest rates for a 75% loan to value residential mortgage with Coventry Building Society:

• 1.49% fixed for 2 years
• 1.69% fixed for 5 years

Interest only mortgages Barclays

Barclays provides interest-only mortgages for residential, offset, and buy-to-let properties. When you take out this kind of mortgage, you won’t be paying the full principal amount each month; instead, only the interest is due. Depending on your loan type, credit score, and other factors like loan-to-value ratio or term length – rates can vary significantly with an interest only mortgage from Barclays. It’s essential to have a repayment plan in place so that at the end of your term you’ll have fully paid off your debt!

Below are the interest rates for a 75% loan to value residential mortgage with Barcalys:

• 1.64% fixed for 2 years
• 1.99% fixed for 5 years

Below are the interest rates for a 75% loan to value buy-to-let mortgage with Barcalys:

• 1.99% fixed for 2 years
• 2.29% fixed for 5 years

Interest only mortgages Halifax

If you’re looking for a mortgage where your monthly payments only cover the interest and not the principal amount, Halifax offers just that! Halifax interest only mortgage comes in two types – residential and buy-to-let – with rates varying due to factors such as loan-to-value ratio, term length of the loan, and credit score. Don’t forget though; it is vital to have an effective repayment plan prepared so at the end of the mortgage you can pay off your full debt.

Below are the interest rates for a 75% loan to value residential mortgage with Halifax:

• 1.59% fixed for 2 years
• 1.79% fixed for 5 years

Below are the interest rates for a 75% loan to value buy-to-let mortgage with Halifax:

• 1.89% fixed for 2 years
• 2.09% fixed for 5 years

Santander interest only mortgage

Unlike Barclays, Santander does not provide offset mortgages. Furthermore, their interest-only mortgage has distinct eligibility requirements and repayment methods for which the rates are determined by various factors such as your credit score, mortgage type, loan to value ratio (LTV) and interest only mortgage term.

Below are the interest rates for a 75% loan to value residential mortgage with Santander:

• 1.49% fixed for 2 years
• 1.69% fixed for 5 years

Below are the interest rates for a 75% loan to value buy-to-let mortgage with Santander:

• 1.99% fixed for 2 years
• 2.29% fixed for 5 years

HSBC interest only mortgage

In contrast to Barclays and Santander, HSBC does not provide buy-to-let mortgages in their interest only mortgage selection. Additionally, eligibility requirements and repayment processes may vary from lender to lender. Although the applicable interest rate is contingent on a few factors such as the type of loan, amount borrowed (LTV), term period, and credit score – you can be sure that HSBC has your back with an array of options for everyone!

Below are the interest rates for a 75% loan to value residential mortgage with HSBC:

• 1.49% fixed for 2 years
• 1.79% fixed for 5 years

Natwest interest only mortgages

Natwest offers interest-only mortgages for residential and buy-to-let properties that allow you to pay only the monthly loan interest and not the principal amount. Nevertheless, a repayment plan must be in place at the end of your mortgage term in order to fully settle your loan. Interest rates differ based on factors such as type of mortgage, Loan To Value (LTV), duration and credit score.

Below are the interest rates for a 75% loan to value residential mortgage with NatWest:

• 1.55% fixed for 2 years
• 1.85% fixed for 5 years

Below are the interest rates for a 75% loan to value buy-to-let mortgage with NatWest:

• 1.99% fixed for 2 years
• 2.19% fixed for 5 years

Nationwide interest only mortgage

Interest only mortgages from Nationwide are comparable to those of Natwest’s, however there is no buy-to-let option. Eligibility criteria and repayment options differ between the two companies as well, with varying interest rates based on the mortgage type, Loan To Value (LTV), term length, and credit score.

Below are the interest rates for a 75% loan to value residential mortgage with Nationwide:

• 1.64% fixed for 2 years
• 1.84% fixed for 5 years

Nationwide may not offer buy-to-let mortgages directly, but they have a specialist lender The Mortgage Works that is part of their group. Through them, you can access a whole range of attractive and feature-packed buy-to-let mortgage options with competitive rates.

The Mortgage Works

Below are the interest rates for a 75% loan to value residential buy to let mortgage with The Mortgage Works:

• 1.99% fixed for 2 years with a £1,995 fee
• 2.49% fixed for 5 years with a £1,995 fee
• 2.09% tracker for 2 years with a £1,995 fee
• 3.29% fixed for 10 years with a £1,995 fee

Virgin Money interest only mortgages

With an interest-only mortgage from Virgin Money, you only pay the interest on your loan each month and not the principal amount. To make sure you can settle this debt in full at the end of the mortgage term, a repayment plan is essential. Our residential mortgages start as low as £75,000 total household income with varying rates depending upon the type of mortgage, loan-to-value ratio, and credit score! And don’t forget that we also offer buy to let mortgages too – all on an interest only or part & part basis.

Below are the interest rates for a 75% loan to value residential mortgage with Virgin Money:

• 1.54% fixed for 2 years
• 1.84% fixed for 5 years

Below are the interest rates for a 75% loan to value buy-to-let mortgage with Virgin Money:

• 1.74% fixed for 2 years
• 2.04% fixed for 5 years

Yorkshire Building Society interest only mortgages

Yorkshire Building Society offers you interest only residential mortgage where you just pay the interest each month, rather than the principal amount. You must have a repayment strategy to cover the loan at its end. The rate of interest fluctuates depending on your credit score, term length, type of mortgage and loan-to-value ratio. By opting for a residential mortgage from Yorkshire Building Society with an interest only basis, you can borrow up to 75% in terms of loan-to-value – offering greater flexibility and potential savings!

Below are the interest rates for a 75% loan to value residential mortgage with Yorkshire Building Society:

• 1.49% fixed for 2 years
• 1.69% fixed for 5 years

Should I consider a repayment mortgage?

When deciding upon a mortgage, you must ask yourself which type is right for you: an interest-only or a capital repayment mortgage. On its surface, the interest-only mortgage might appear attractive because of its lower monthly costs; however, this route can be fraught with risks and undesirable consequences. With an interest-only mortgage, the danger is real; since you’re simply paying off your interest payments and not the main balance, at the end of the mortgage term all that will be left to pay is the full amount.

This can seem intimidating as it would require a clear payment plan to be in place. If payments cannot be met on this loan then there’s no escape—your home could potentially have to be sold in order to repay the mortgage. If you opt for a repayment mortgage, not only will your monthly payments be higher than with an interest-only option; but you’ll also have the peace of mind of knowing that at the end of your mortgage term, you’ll own your home outright.

It’s imperative to evaluate the pros and cons of repayment mortgages and residential interest only mortgage before deciding. However, if you can afford higher monthly payments, a repayment mortgage is typically more secure. Conversely, an interest-only mortgage could be suitable for those who have a clear plan for repaying their debt at the end of their mortgage term and are willing to accept any risks involved.

How YesCanDo Money can help you achieve the best interest only mortgage rate

If you have a dependable repayment plan in place, an interest only mortgage might be the perfect choice for your borrowing needs. But before taking this route, it’s important to understand that these mortgages may come with risks and complications. Want more insight? Reach out to YesCanDo Money – our team of mortgage advisors can advice and help you with your mortgage without charging you any fees! We will provide all the information required to help make the best decision on whether an interest only mortgage or a capital repayment mortgage is best for you.

Wondering can I extend my interest-only mortgage term or you are intersted in getting a new mortgage? YesCanDo Money is the perfect choice if you are searching for a fee-free mortgage broker. They will help you compare different lenders and find an interest only mortgage that meets your individual needs. Not only do they provide their expertise, knowledge, and customer service to make sure you get the best rate possible but also assist you with the application process and maintain communication between yourself and the lender. Unlock all these benefits now by completing their online inquiry form or call them directly!