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Mortgage calculator

Interest-Only Mortgage Calculator

Work out your monthly interest-only payment, the total interest over the term, and how much capital you'd still owe at the end. See it side by side with a repayment mortgage. Free, no signup.

Free, no signupUK figures, GBPInterest-only vs repayment
Your mortgage
How much you want to borrow
£
Your mortgage rate
%
How many years the mortgage runs for
yrs
An interest-only mortgage means your monthly payment covers the interest and nothing else. The loan itself does not shrink, so you need a separate plan to repay it at the end.
Monthly interest-only payment
£833.33
You would still owe the full £200,000 at the end of the 25-year term.
Interest-only£833.33 /mo
Repayment£1,169.18 /mo
Interest-only costs less each month, but the repayment mortgage clears the balance. With interest-only you still owe the full loan at the end of the term.
Interest-only, each month£833.33
Repayment, each monthSame loan, capital and interest£1,169.18
Extra per month on repayment£335.85
Total interest, interest-only£250,000
Total interest, repayment£150,754
Extra interest on interest-onlyWhat interest-only costs you over the term£99,246
Capital still owed at the end£200,000
Assumes a fixed rate for the whole term. Interest-only figures repay none of the capital, so the loan is unchanged at the end. UK figures, GBP. A guide, not financial advice.
Simon Chadwick
Simon Chadwick
Founder, Orbit Money
Method: interest = loan × rate ÷ 12Updated: 16 July 2026Sources: MoneyHelper

How an interest-only mortgage works

With an interest-only mortgage your monthly payment covers the interest on the loan and nothing more. The balance you borrowed stays the same for the whole term. Borrow £200,000 and, thirty years later, you still owe £200,000. The monthly cost is lower than a repayment mortgage because you are not chipping away at the capital, but that capital does not go anywhere on its own.

How the monthly payment is calculated

The maths is short. Take the loan, multiply by the annual rate, then divide by 12 for the monthly figure. A £200,000 loan at 5% works out at £200,000 × 0.05 ÷ 12, which is £833.33 a month. Because no capital is repaid, that payment holds steady for the whole term as long as your rate does not change. Move the rate and the payment moves with it, which is the main risk on a variable deal.

Interest-only vs repayment: the trade-off

The calculator above puts both side by side. A repayment mortgage costs more each month, because part of every payment clears the balance, but by the end you owe nothing and you pay less interest overall. An interest-only mortgage is cheaper month to month and leaves your cash free, yet over the full term it usually costs thousands more in interest and the whole loan is still waiting at the end. The right choice depends on why you want the lower payment and how you plan to clear the debt.

You need a plan to repay the capital

This is the part that catches people out. At the end of an interest-only term the full loan falls due as a lump sum. Lenders want to see how you will pay it: savings, investments, a pension, or the sale of the property. Buy-to-let landlords often plan to sell or refinance. If you reach the end with no repayment plan, the lender can require you to sell the home. Set the plan up at the start, not the finish.

How to use this calculator

  1. Enter the loan amount, your interest rate and the mortgage term.
  2. Read your monthly interest-only payment at the top.
  3. Check the capital you'd still owe at the end. On interest-only it's the full loan.
  4. Compare the monthly cost and total interest against a repayment mortgage to see the trade-off.

Frequently asked questions

How much is a £200,000 interest-only mortgage per month?
On an interest-only mortgage the monthly payment is the loan times the annual rate, divided by 12. A £200,000 loan at 5% costs £833.33 a month. That figure covers the interest only, so the £200,000 balance stays exactly the same. At the end of the term you still owe the full £200,000 and need a plan to repay it.
What happens at the end of an interest-only mortgage?
The full loan falls due as a lump sum. Your monthly payments only ever covered the interest, so none of the capital was repaid. You need a repayment vehicle in place, for example savings, investments, a pension lump sum, or the sale of the property. If you reach the end without a way to clear the balance, the lender can require you to sell the home.
Is an interest-only mortgage cheaper than a repayment mortgage?
The monthly payment is lower, because you are not paying off any capital. Over the full term it usually costs more in total interest, since the balance never shrinks and interest is charged on the whole amount every month. Enter your figures above to see the monthly saving and the extra total interest side by side.
Can I switch from interest-only to a repayment mortgage?
Often yes. Many lenders let you switch to repayment, or move part of the balance across, though it will raise your monthly payment because you start clearing the capital. Some borrowers overpay each year to chip away at the balance instead. Speak to your lender about the options on your specific mortgage.
Is an interest-only mortgage a good idea?
It can suit borrowers with a solid, separate plan to repay the capital, such as buy-to-let landlords or people expecting a lump sum. The lower monthly payment frees up cash flow. The risk is real: the debt does not reduce, you pay more interest overall, and you must repay the whole loan at the end. It is not a way to make an unaffordable home affordable.
How is the interest-only monthly payment worked out?
Take the loan amount, multiply by the annual interest rate as a decimal, then divide by 12. For example £150,000 at 4.5% is £150,000 × 0.045 ÷ 12, which is £562.50 a month. Because no capital is repaid, this monthly figure stays the same for the whole term as long as the rate does not change.

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Simon Chadwick
About the author
Simon Chadwick
Founder of Orbit Money

Simon is the founder of Orbit Money, a tool that helps people track subscriptions and recurring spend. He builds Orbit's free money calculators and writes about personal finance for UK and Australian readers.

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This tool is a guide, not financial advice.