Interest only mortgages in the UK allow you to make mortgage payments that only cover the interest on the loan and do not work to repay any of the principal.
This UK interest-only mortgage calculator helps you see monthly mortgage payments when only the interest is being repaid.
What is the monthly payment on a £100K interest-only mortgage in the UK?
The monthly mortgage payment for a £100K interest fluctuates based on the mortgage interest rate. The length of the amortization period does not impact the monthly amount as no princpal is being repaid each month. This chart shows the monthly payments at various mortgage rates.
| Loan Amount | 2.00% | 3.00% | 4.00% | 5.00% |
|---|---|---|---|---|
| £100K | £166 | £250 | £333 | £416 |
What are the benefits of a interst-only mortgage?
An interest only mortgage in the UK will help make your monthly mortgage payments more affordable. Since you are only paying the interest on the princiapl loaned, and not repaying any of the principal, it will result in a lower monthly mortgage payment. This would help make the process of purchasing a home more affordable.
When thinking about an interest-only mortgage in the UK it is also important to compare payments to a repayment mortgage to see how much of a difference an interest-only mortgage will make in improving home affordability. Another option to help reduce your monthly mortgage payment would be to extend the amortization period with a repayment mortgage.