Interest-only mortgages charge lower monthly payments because you only pay the interest, not the capital. The full loan balance remains outstanding and must be repaid at the end of the term.\n\nWho Qualifies — Most lenders require a minimum income of 75,000 to 100,000 for residential interest-only. Maximum LTV is typically 60% to 75%. You must demonstrate a credible repayment vehicle that will clear the balance at maturity.\n\nAccepted Repayment Vehicles — Sale of the mortgaged property (most common — you plan to downsize). Sale of another property. ISAs and investment portfolios. Pension lump sums (usually the 25% tax-free element). Endowment policies. Some lenders accept a combination of vehicles.\n\nThe Maths — On a 300,000 interest-only mortgage at 5% over 25 years, monthly payment is 1,250 versus 1,754 on repayment. You save 504 per month but after 25 years still owe 300,000. Total interest paid on interest-only is 375,000 versus 226,200 on repayment — a difference of 148,800.\n\nPart-and-Part Mortgages — Many borrowers choose a hybrid: part on interest-only and part on repayment. This keeps payments manageable while gradually reducing the balance. You only need a repayment vehicle for the interest-only portion.\n\nBuy-to-Let Interest Only — Most BTL mortgages are interest-only by default. The rental income covers the interest. The capital is repaid when the property is sold. Lenders do not usually require a formal repayment vehicle because the property itself serves that purpose.\n\nWhat Happens at Maturity — If you reach the end of your term with no way to repay, contact your lender immediately. Options include extending the term, switching to repayment, selling the property, or using equity release. Lenders have a regulatory duty to treat you fairly and explore alternatives before repossession.