Interest-Only vs Repayment Calculator

Lower payments now, or a cleared mortgage later? Compare both routes honestly · including the capital cliff and the invest-the-difference gamble.

Monthly Payment Difference
£0
Enter your details to compare
Repayment · Monthly
£0
Interest-Only · Monthly
£0
Total Interest · Repayment
£0
Total Interest · Interest-Only
£0
Owed at Term End (IO)
£0
Invested Difference Would Grow To
£0
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Balance Owed vs Investment Pot Over the Term

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Interest-Only vs Repayment FAQs

What is the difference between the two?
A repayment mortgage clears the loan over the term: every payment covers interest plus a slice of capital, and you owe nothing at the end. Interest-only payments cover just the interest · much cheaper monthly, but the entire original loan is still owed at term end and must come from savings, investments, downsizing or sale.
Why do lenders restrict interest-only?
The capital cliff. Residential interest-only typically requires a credible repayment vehicle, big equity (max 50-75% LTV is common) and higher minimum incomes (often £75,000+). "Sale of the property" is only accepted with a large equity buffer. Buy-to-let is the exception, where interest-only remains standard.
Does investing the difference actually beat repayment?
It can on paper: returns above the mortgage rate compound the invested difference beyond the loan. But it exchanges a guaranteed, tax-free "return" (interest avoided) for decades of market risk · and a shortfall at term end can force selling your home. This calculator shows the honest gap; treat outperformance as a bonus, not a plan.
What is part-and-part?
A split mortgage: a portion on repayment, the rest interest-only. Monthly costs sit between the two, and the term-end cliff shrinks to the interest-only slice. Useful when affordability is tight but you have a concrete future capital source · a maturing investment, downsizing plan or known inheritance.
Can I switch between them?
Switching to repayment is usually straightforward at remortgage (and often mid-term). Moving to interest-only is harder: the lender must approve your repayment strategy under affordability rules. A flexible middle path: stay on interest-only and voluntarily overpay · you replicate repayment while keeping the option to stop.

For informational purposes only · Not mortgage advice · Assumes constant rate over the term · Investment returns are illustrative, not guaranteed; a shortfall means the loan is still owed · Lender criteria for interest-only vary