Mortgages

Interest-Only vs Repayment Mortgage Calculator

Interest-only can make the required mortgage payment look much lower because the capital is not being repaid. This calculator keeps the outstanding balance and the cost of a separate repayment strategy visible.

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Mortgage details

Use the same balance, rate and term for a clean comparison.

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years

Separate repayment plan

Only use a return assumption you understand and are comfortable stress-testing.

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Your estimate

Use the result as a planning guide and change inputs to test the assumptions that matter most.

How this calculator works

The repayment scenario amortises the mortgage to zero over the selected term. The interest-only scenario pays only monthly interest, leaving the original capital outstanding. A separate savings calculation estimates the monthly contribution required to build a pot equal to the mortgage balance by the end of the term.

How to use it

  1. Enter the mortgage balance, interest rate and remaining term.
  2. Enter a cautious return assumption for a separate repayment vehicle if you want to model one.
  3. Compare the repayment payment with the interest-only payment.
  4. Pay particular attention to the capital still outstanding under interest-only.
  5. Compare the interest-only payment plus required saving with the repayment mortgage payment.

Assumptions and limitations

This is not a recommendation to use investments or savings to repay an interest-only mortgage. Returns are uncertain, fees and tax can apply, and a repayment vehicle can underperform. Lenders have specific eligibility and repayment-strategy requirements.