Are interest-only mortgages making a comeback?  


Interest-only mortgages used to be all the rage with borrowers, until lenders deemed them too risky for the mass market and limited their offerings after the financial crash. However, research by seems to suggest that the tide might be turning.

Poor performing endowment policies were the reason behind a large number of borrowers finding themselves unable to repay their interest-only mortgage at the end of their mortgage term. As a result, interest-only mortgages disappeared as a mortgage choice for the wider market, as lenders considered the risk too high.

In May 2013, only 102 interest-only mortgages were available, but has discovered that the number has almost doubled over the past six years. Today there are 193 interest-free mortgage products available to borrowers.

While this is still a relatively small proportion of the overall mortgage market (3.86%), it does seem to show a willingness by lenders to relax the rules when it comes to risk.

More products, but no increase in interest-only mortgage approvals

Interestingly, while the number of interest-only mortgages available has increased, there has been no marked rise in borrowers taking them up. Borrowers, it seems, remain cautious around the prospect of an interest-only mortgage after the highly publicised fall out of failed endowment policies leaving many without any means to repay their mortgage.

However, it is more likely that borrowers are put off by lender requirements to secure an interest-only mortgage today. Applicants are expected to present a viable and robust plan for repayment of the mortgage early in the application process for inspection by the lender. Jumping through hoops to pass stricter lending criteria and presenting a feasible repayment plan that will pass the scrutiny of the lender is likely to put many people off, when they coud choose a simpler course of action with a straight repayment mortgage.

Retirement interest-only make up 25% of the products available

44 of the 193 interest-only products available are retirement interest only mortgages aimed at borrowers approaching retirement with no means to repay their interest-only mortgage due to a failed investment or lack of planning.

The Financial Conduct Authority (FCA) stepped in and loosened the regulations, resulting in a greater choice of retirement interest-only products that will allow mature borrowers to pay only their monthly interest on their mortgage until they die or enter long term care, when the property is sold to repay the capital.

Interest-only mortgages may be back on the table, but it’s unlikely they will become the mortgage of choice again as both lenders and borrowers prioritise minimising risk.


Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800


Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator


Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.


Not a member? Sign up for free

Are interest-only mortgages making a comeback?  

Are interest-only mortgages making a comeback?  


By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.