Why it matters
What Interest-Only Mortgage means for a landlord
Interest-only keeps monthly outgoings low and, before Section 24, made the whole payment tax-efficient, but it leaves a lump sum owed at the end of the term. Landlords relying on rising prices to clear that capital are exposed if values fall or lending tightens at remortgage. The prudent view treats the eventual capital repayment as a planned event (sale, savings, or refinance), not something to worry about later.
Worked example
How it plays out
Kerry’s £150,000 interest-only mortgage at 5% costs £625 a month. After 25 years she still owes £150,000. Her plan is to sell the flat or refinance at the end of the term, and she reviews that plan every five years.
Common mistakes
Where landlords go wrong
- 01Having no plan to repay the loan.
- 02Assuming prices will rise enough to cover it.
- 03Ignoring what higher rates would mean at refinance.
What to do
A short checklist
- Write down how you will repay the capital.
- Review the plan at each remortgage.
- Consider overpayments if your mortgage allows them.
Sources
Checked against these sources on 16 September 2026. A guide to the rules in England, not legal advice: for a dispute or a possession claim, speak to a solicitor.
