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Interest-only mortgage

Cards & borrowing
A mortgage where you pay only interest each month and repay the balance at the end.

Overview

Interest-only mortgages require a separate plan to repay the original loan.

They often have stricter eligibility criteria.

Why it matters

  • Monthly payments are lower but the balance remains.
  • You must have a clear repayment strategy.
  • It can carry more risk if property values fall.

FAQs

Do interest-only mortgages affect my credit score?

Payments are reported like any mortgage. Missed payments can harm your score.

Are interest-only mortgages common?

They are less common than repayment mortgages and are more restricted.

Related terms

MortgageRepayment mortgageAffordability assessment

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