Interest only repayment

Your client(s) must have a suitable repayment strategy in place to repay the loan at the end of the term 

Your client must have a minimum of £250k equity, or £300k if in London, at the point of application for sale of mortgaged property as a repayment strategy, up to 60% LTV. London addresses are defined by those which are in the ONS regions definition of London. 

Interest only is not available when capital raising for debt consolidation.

Acceptable repayment strategies

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 exceed end of mortgage term.
• The endowment must be in the name of the borrower(s) only. 
• It must be a UK policy provided by a regulated firm.

General Investments: 

• The current value of the investments must cover 100% of the I/O element of the mortgage. The total can include eligible savings referred to below.
• The investments must be in the name of the clients only. 
• The investments must be in pounds sterling.
• The investment must have been in place for a minimum of 12 months. 

Savings: 

• The current value of the savings must cover 100% of the I/O element. The total can include eligible investments referred to above.
• The savings must have been held for a minimum of 12 months.
• The savings must be in the name of the clients only.
• The savings must be in pounds sterling.

Sale of Mortgaged Property: 

• This can be used to cover up to a maximum of 60% of the value of the property.
• Total borrowing can go to 85% LTV by using an additional repayment strategy or borrowing on a capital and interest basis. 
• For interest only lending the property must have a minimum equity of £250,000 or £300,000 if the security addresses is in London, at the time of application. For part interest only and part repayment lending the minimum equity requirements are calculated at the end of the mortgage term. London addresses are defined by those which are in the ONS regions definition of London.
• The customer must provide details of their downsizing strategy. 
• The declared downsizing strategy must be plausible.

Our equity requirements for interest only are dependent on postcode. To find out your clients equity requirements please refer to our postcode checker.

Sale of other UK property 

• A maximum of 75% of the equity in the property can be used as your repayment strategy.
• The property must be in the UK. 
• The property must be in your name/s only with no other parties named.

Pension Lump Sum 

• For defined contribution schemes and Self Invested Pension Plan (SIPP) – A maximum of 60% of tax-free lump sum (15% of 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. 
• To use this as your strategy your full mortgage term must take you beyond the age of 55 and your declared retirement age must be at or before the end of the term of the mortgage. 

Applicant age for interest only

Interest only borrowing is not permitted if the term of the mortgage goes beyond your client(s) stated retirement age or age 70, whichever is sooner. 

The term can exceed their 70th birthday however their income will not be used for affordability. The term can not go beyond the applicants stated retirement age or age 70, whichever is sooner where income is required. 

Sole applications – Interest Only lending permitted to already retired customers where max age at end of term not greater than 70.


Joint applications – Interest Only lending permitted where any applicant is already retired.



Loan size & LTV limits for interest only

• The maximum LTV for interest only lending is 75%. 
• For mortgages that are part capital and interest and part interest only, the maximum case LTV is 85% provided the interest only part does not exceed 75%.