What is an interest only mortgage?

An interest only mortgage is one where your monthly payments only cover the interest charged on the amount you’ve borrowed. 

This means your monthly payments may be less. But, it also means you don't pay off any of the original loan amount. 

You’ll need be able to show that you have an acceptable plan to pay off the loan amount at the end of the mortgage term.

Already have a YBS mortgage? Go to interest only for existing customers.
putting picture on the wall

Can I get an interest only mortgage?

You’ll need to
Have an acceptable plan in place to repay the loan at the end of the term. We call this a repayment strategy.
Provide evidence of your repayment strategy during the application process.
Provide this evidence again at least once during the mortgage term.
You can not
Borrow over a maximum of 75% loan to value.
Borrow for debt consolidation.
Borrow for a term that goes beyond your stated retirement age or age 70, whichever is sooner. If your income is not needed to make the loan affordable, you may be able to go beyond this age. 

Repayment strategies

You’ll need to show that you an acceptable plan to pay off the loan at the end of your mortgage. 
We call this plan a repayment strategy. 
Repayment strategies we accept Details for this strategy
Sale of Mortgage Property at the end of term
  • This can cover up to a maximum of 60% of the value of the property.
  • You can borrow up to 85% loan to value (LTV) on a Capital Repayment basis. But only 75% can be on an Interest Only basis by using an additional repayment strategy.
  • For Interest Only lending the property must have a minimum equity of £250,000 at the time of application for non-London properties and £300,000 for properties located in London. For Part Interest Only & Part Repayment lending the minimum equity requirements are calculated at the end of the mortgage term.
Sale of other UK property
  • You can use a maximum of 75% of the equity in the property as your repayment strategy.
  • The property must be in located in the UK.
  • The property must be in your name only with no other parties named.
  • You'll need to show a copy of the latest mortgage statement if it is mortgaged by another lender.
Pension Lump Sum For defined contribution schemes and Self Invested Pension Plans (SIPP)
  • A maximum of 60% of your tax-free lump sum, or 15% of your total pension pot, can be used towards your strategy.
For defined benefit schemes
  • A maximum of 90% of the tax-free lump sum can be used towards your strategy.
  • Your mortgage term must take you beyond the age of 55. And your declared retirement age must be at or before the end of the mortgage.
You'll need to show your latest pension statement.
Savings
  • The current value of the savings must cover 100% of the interest only borrowing. The total can include eligible investments that we refer to below.
  • The savings must have been held for a minimum of 12 months.
  • The savings must be in pounds sterling.

You'll need to show your latest savings statement.

Existing Endowments
  • The projected mid-point maturity value must cover 100% of the interest only borrowing.
  • The endowment must have been in place for at least 12 months.
  • The end of the endowment term must not be later than the end of the mortgage term.
  • It must be a UK Policy provided by a regulated firm.

You'll need to show your latest endowment policy statement, dated in the last 12 months.
General Investments
  • The current value of the investments must cover 100% of the interest only element of the mortgage. The total can include savings that meet our terms and conditions and that are referred to above.
  • The investments must be in pounds sterling.
  • The investment must have been in place for a minimum of 12 months.

For stocks and shares ISAs, Unit Trusts/OEIC, or for Investment Bonds, you'll need to show your latest statement. For stocks and shares ISAs you may need to show copies of share certificates or statements containing evidence of shareholdings and their valuation.

How to get an interest only mortgage

Number 1

Get a Decision in Principle (DIP)

Get a Decision in Principle (DIP) to find out how much you could borrow. Choose how to get a DIP below.

You may need a DIP to make an offer on a home.  
Number 2

Apply for a mortgage

Complete a full application over the phone. 

You cannot apply online for an interest only mortgage.
Number 3

Get your mortgage offer

We'll value your home and check your credit history. Then we'll be in touch within 15 working days.
Number 4

Complete

Once the legal work is complete, you’ll exchange contracts if you’re moving home. Or you’ll move to your new mortgage deal if you’re switching.

Get a Decision in Principle

You’ll need to call us for Decision in Principle about an interest only mortgage. 
Get an instant decision over the phone
Valid for 90 days
Doesn’t affect your credit score
Talk to our mortgage specialists.
9am to 5pm Monday to Friday
9am to 1pm Saturday
Calls to 03 numbers are charged at the same rate as 01 or 02 numbers from all phones.
Grandfather and grandson building table
Smiling woman in kitchen

How much can I borrow?

Our borrowing calculator can tell you how much we may be able to lend to you.
Call us
Chat to our mortgage specialists about your options.
9am to 5pm Monday to Friday
9am to 1pm Saturday
Calls to 03 numbers are charged at the same rate as 01 or 02 numbers from all phones.
Book an appointment
Book an appointment and we'll call you back.