At 5.5%, a £100,000 interest-only mortgage costs £458.33 a month. At 4% it is £333.33. At 6%, £500 flat.
That is the number you came for, and the arithmetic behind it takes one line.
The half that catches people out is the rest of it: on the final day of the term you still owe the whole £100,000, and finding it is your job, not your lender’s.
We buy around 500 houses a year for cash, and roughly 60% come from landlords leaving the market or owners whose interest-only mortgage is about to expire. I see how these mortgages end far more often than how they start.
How much a £100,000 interest-only mortgage costs each month
Multiply the balance by the rate, then divide by 12.
£100,000 × 5.5% = £5,500 of interest a year. Divide by 12 and you get £458.33 a month.
That is the whole sum. No capital is being repaid, so there is nothing else sitting in the payment.
Worth memorising: every 1% of interest on £100,000 costs exactly £83.33 a month. Rate up a point, add £83.33. Down a point, take it off. So you can price up whatever rate your lender actually quotes, which is more than most calculators manage.
| Interest rate | Monthly payment on £100,000 |
|---|---|
| 3.5% | £291.67 |
| 4% | £333.33 |
| 4.5% | £375.00 |
| 5% | £416.67 |
| 5.5% | £458.33 |
| 6% | £500.00 |
| 6.5% | £541.67 |
| 7% | £583.33 |
Figures correct as at September 2026, and they assume the rate holds for the whole term, which over 25 years it will not.
The term makes no difference. The total does.
Ask for £100,000 interest-only over 10 years or over 30, and the monthly payment is identical.
On a repayment mortgage, a longer term spreads the capital over more months, so the payment drops. Interest-only has no capital in the payment to spread. The balance on the last day is the balance on the first.
That difference in the balance is what produces the figure nobody prints beside the monthly one. Over 25 years at 5.5% you pay £137,500 in interest, then hand in the £100,000. £237,500 all in.
| £100,000 over 25 years | Monthly | Total paid | Still owed at the end |
|---|---|---|---|
| Interest-only at 4% | £333 | £200,000 | £100,000 |
| Repayment at 4% | £528 | £158,351 | £0 |
| Interest-only at 5.5% | £458 | £237,500 | £100,000 |
| Repayment at 5.5% | £614 | £184,226 | £0 |
Interest-only saves you around £195 a month at 4%, and £156 at 5.5%. In exchange you pay roughly £53,000 more overall and still owe the £100,000.
Interest-only is not a cheaper mortgage. It is a deferred one.
What your payment does when the fixed deal ends
The Bank of England held Bank Rate at 3.75% on 30 July 2026. In mid-July 2026 the average two-year and five-year fixes were both around 5.5% according to Moneyfacts, and the average standard variable rate is 7.13%.
On £100,000 interest-only, that is about £460 a month on the average fix and £594 on the average SVR.
That gap is £134 a month. Roughly £1,608 a year. For doing nothing at all.
Rate rises hit interest-only borrowers harder, and there is a structural reason. Ten years into a repayment mortgage the balance has fallen a long way, so a higher rate applies to a smaller debt. On interest-only, 100% of your payment is interest on the same £100,000 you borrowed. Nothing has shrunk to soften it.
So diarise the end of your fix and start looking three to six months out. Sliding onto SVR by accident is the priciest way there is to do nothing.
The day the term ends and the £100,000 falls due
Every interest-only borrower hits the same wall eventually. On the last day of the term, the full balance is due in one payment.
FCA rules (MCOB 11.6.41R) allow a lender to offer interest-only only where you have a clearly understood and credible strategy for repaying the capital, and an adviser has to make sure you know you will be asked to evidence it.
What the rules do not do is make the plan your lender’s problem. You own it. They will check on it at least once during the term, and that is broadly the extent of the support.
MoneyHelper lists what usually counts: cash savings or a cash ISA (some lenders no longer accept this), a stocks and shares ISA, pensions, investment bonds, shares, unit trusts, endowment policies, or another property.
What does not count: a hoped-for inheritance, a bonus, or house prices rising enough for you to downsize on.
UK Finance counts around 60,000 interest-only loans maturing by 2027, and here is what troubles me about that number. People facing the loss of a home bury their heads in the sand and hope. A relative will step in. A deal will come off. Something will turn up.
One client rang us in the week of their repossession. We exchanged contracts within 48 hours and stopped it.
Good outcome. It should never have been that close.
Your options while the term is still running
Time is the asset here. While the clock is running, all of this is on the table:
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Tell your lender now, before any arrears, and ask what they can move you onto.
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Switch to repayment, or move part of the loan to repayment and keep the rest interest-only.
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Overpay, where your deal allows it, watching annual limits and early repayment charges.
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Ask to extend the term so your repayment plan has longer to mature.
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Take in a lodger. The first £7,500 a year is tax free under the Rent a Room scheme.
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Get free debt advice from MoneyHelper or Shelter. Breathing Space can pause repossession action while you sort things out.
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Sell on your own terms, at your own pace, with the whole market looking.
If you have a year or more of runway, that last option usually should not be a cash sale, and I tell people so most weeks. With time on your side, an estate agent will get you more than I will.
If the term has ended, or repossession is already moving
Once the term expires you are in breach of contract, and your lender can bring a possession claim in the county court. Shelter’s guidance is the place to start: ask for more time in writing, get confirmation of what you must pay and for how long, and ask about an assisted voluntary sale. You can also apply for a time order, where a court sets new instalments.
One line matters more than the rest: your lender must consider delaying court action if you are taking genuine steps to sell.
Then there is the money. In a repossession the lender adds its own costs to the debt and takes them off the sale proceeds: court fees, surveyor fees, extra mortgage costs, bailiff fees, agent fees. It runs into thousands. A standard sale carries none of them.
And once a lender has an order for repossession, it will happen unless you act. We have stopped thousands of repossessions over the years by exchanging contracts quickly. Once contracts are exchanged the lender is held off, and you can take up to four months to complete and find somewhere else to live.
The redemption figure is not the balance in your app
Budgeting to clear exactly £100,000? Budget higher. The figure on your completion statement is usually around £2,000 more than the balance showing in your banking app, once interest to completion and any early repayment or exit fee is added. Work from the lender’s formal redemption statement.
If you are over 55 with a maturing interest-only loan
Age closes most doors at maturity, and opens two that younger borrowers do not have.
Mainstream lenders want the loan finished by around 75 to 80. NatWest caps interest-only at the borrower’s 70th birthday or intended retirement age, whichever is lower. That is usually what kills the remortgage.
The two that open up: a retirement interest-only mortgage, which has no fixed end date and is repaid when the property is sold, you move into long-term care or you die; and a lifetime mortgage from 55, where the interest rolls up and compounds instead of being paid each month.
We do not see many equity release sellers, because releasing equity gives people cash without a sale. The ones who do come to us have taken everything the provider will allow and want the rest. Equity release unlocks part of your property’s value. Selling unlocks all of it.
Is an interest-only mortgage a good idea?
For a small group, genuinely yes.
It works for landlords whose rent comfortably covers the interest, with the property itself as the exit. It works where a funded repayment vehicle exists and somebody is paying into it. It works for later-life borrowers with big equity and a deliberate downsizing plan, and for short-term situations with a defined end.
It hurts everyone else. No vehicle, thin equity and “I’ll sell up eventually” is not a strategy. It is a deadline you have not priced.
The test I would apply before signing: if the term ended twelve months from today, could you name the account, policy or asset that clears the £100,000, and say roughly what it is worth right now?
If the answer is not a number, you do not have a repayment plan. You have a hope.
Why £100k interest-only can be harder to get than £250k repayment
Ask what salary you need for a £100,000 mortgage and the usual answer is £18,000 to £25,000, on the standard 4 to 4.5 times income. Right for repayment. Wrong here.
Interest-only is priced for risk rather than size, and every lender sets its own bar:
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NatWest: minimum income of £75,000 sole or £100,000 joint, whatever the loan size.
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Metro Bank: minimum income of £50,000 if any part of the loan is interest-only.
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Leeds Building Society: interest-only capped at 60% LTV, with further lending on repayment up to 75%.
Caps of 50% to 75% LTV are common, so interest-only asks for a bigger deposit than repayment, not a smaller one. And the book is shrinking: UK Finance counted 445,000 pure interest-only homeowner mortgages at the end of 2025, with total interest-only stock, part-and-part included, down 81% since 2012.
Common questions
Can I get a 25-year mortgage at 55, or a 20-year term at 70?
25 years from 55 ends at 80, the outer edge of most mainstream lenders’ maximum age at the end of the term. It is possible, often only through a specialist later-life lender, some of whom go to around 85 at application. 20 years from 70 ends at 90, which in practice means a retirement interest-only mortgage, a lifetime mortgage, or a sale.
Is a £100,000 buy-to-let mortgage usually interest-only?
Yes, most buy-to-let borrowing is taken interest-only. Rates are higher, deposits of 20% to 25% are typical, and affordability is judged on projected rent rather than salary, with lenders generally wanting the rent to cover the payment by 125% to 145%.
Can my existing lender give me a new rate without a full assessment?
Usually. A product transfer with your current lender does not normally need a fresh affordability assessment, provided you are not borrowing more. Moving to a new lender is a remortgage, with full checks and scrutiny of your repayment plan. MoneyHelper’s rough benchmark for remortgaging an interest-only loan safely is more than 50% equity plus an on-track, widely accepted repayment plan.
Facing the End of an Interest-Only Term?
Get a no-obligation cash offer within 24 hours, with no fees and no estate agents. If you have time on your side, we will tell you that too.
This article is information, not financial advice. Figures are correct as at September 2026 and rates change. For free, impartial help, speak to MoneyHelper or Shelter, or a qualified mortgage adviser. Property Rescue buys homes for cash in England and Wales and, because of our Sale and Rent Back service, we are one of the only house buying companies in the UK regulated by the FCA (Sale and Rent Back only, FCA Register 522471).
