Interest Only Mortgage Rates

Advice on Interest Only Mortgages

Are you considering using an interest only method to repay your mortgage? Whether you are an individual or a landlord investing in property through a limited company, interest-only mortgages can offer a more flexible way of managing a loan.

Of course, at the end of the mortgage, you will still be under obligation to ensure the loan is repaid as with a conventional repayment mortgage. However, if you are confident of having the funds to pay for capital repayment at a later date, this can be a convenient option.

But how much can you expect to pay in interest? Is interest more expensive on interest-only loans? How can you reduce your quoted rates?

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What can you expect for interest only mortgage rates?

There is no such thing as an “interest only rate”- typically, if you are capable of demonstrating you have an acceptable plan for repaying the capital at the end of the term, interest rates should be no higher than those of standard home mortgages.

Landlords should note that interest on mortgages for BTL properties can be tax deductible or qualify for tax relief in some cases. Although changes were made to tax relief for independent landlords in 2016, it’s worth investigating how much you can claim – especially if you are registered as a limited company.

How to find the best interest only mortgage rates

Sourcing the best interest rates for an interest-only mortgage means doing as much groundwork as you can and having “all of your ducks in a row” when it comes to presenting your repayment plan. Today the FCA (Financial Conduct Authority) requires all interest-only mortgage applicants to have a clear and realistic plan for repaying their capital.

Speaking to a wide range of both specialist and mainstream mortgage providers will help you identify the best interest rates in the industry and help you find providers who truly understand your circumstances. Some people may choose to switch to a repayment mortgage after an interest-only period, for example, which may affect their rate. Others may be anticipating a future windfall. All of these factors could affect the quote you receive.

Working with an experienced mortgage broker who understands the industry inside out will help speed up this process.

  • Specialists in Interest Only
  • Free Initial Advice
  • Unlimited Access to the Market
  • 5 * service

Experts, like our team at Just Mortgage Brokers, have established connections with the best interest only lenders and can source fully personalised quotes on your behalf, giving you access to the most competitive rates available.