Interest-Only vs Repayment Mortgage Calculator

Interest-only mortgages have a lower monthly payment than a repayment mortgage for the same loan — but that lower payment doesn't reduce what you owe. At the end of the term, the full amount borrowed is still due, usually repaid by selling the property, an investment vehicle, or refinancing.

This page uses the same mortgage engine as the main calculator, set to make that trade-off concrete: enter your numbers once and switch between repayment and interest-only to see the monthly cost difference and, for interest-only, the lump sum still owed at the end.

Lenders generally only offer interest-only if you can show a credible repayment plan for that final lump sum — an investment portfolio, a pension lump sum, or planned downsizing, for example — rather than simply hoping the property's value will cover it. Repayment mortgages don't have that risk: the balance is guaranteed to reach zero by the end of the term as long as payments are kept up, which is why most residential mortgages in the UK are repayment rather than interest-only.

Comparing both on the same numbers also makes the total-interest gap visible: because a repayment mortgage steadily reduces the amount interest is charged on, it typically pays less total interest over the full term than an interest-only mortgage at the same rate, even though its monthly payment is higher throughout.