How to get an interest-only mortgage as a first-time buyer

Interest-only mortgages can be an option for some first-time buyers who need lower monthly payments and have a clear, credible plan to repay the balance at the end of the term. However, compared with repayment mortgages, interest-only lending is more restricted and is assessed more cautiously.

This guide explains how interest-only works in practice, what lenders typically expect from first-time buyers, and alternatives that may suit you better.

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First-time buyer interest-only mortgage illustration

Can a first-time buyer get an interest-only mortgage?

It’s possible, but it’s not common. Interest-only mortgages are offered by a limited number of lenders, and many are cautious because the loan balance does not reduce during the mortgage term.

That means lenders must be comfortable that you can repay the outstanding amount when the mortgage ends. If your repayment plan is unclear, or if the lender believes the risk is too high, they may decline the application.

Are interest-only mortgages a good idea for first-time buyers?

For some buyers, interest-only can make sense, particularly where monthly affordability is the main concern. Because you’re not paying down the capital each month, your payments may be lower than a repayment mortgage.

That said, whether it’s a good idea depends on your circumstances, including:

Your repayment plan: how you will clear the balance at the end of the term.
Your time horizon: whether you can realistically execute the plan when the mortgage matures.
Your financial resilience: how you would cope if interest rates rise or your income changes.

Interest-only may also be considered if you expect your situation to improve later, for example, if you anticipate building up savings or increasing income and may be able to switch to a repayment structure at a future point.

What lenders usually look for

While each lender has its own policy, common factors include:

Deposit level

A larger deposit is often required for interest-only mortgages. Some lenders may expect a deposit of at least 20%, and in some cases more.

A bigger deposit can help demonstrate lower risk and may improve the range of products you can access. It also lowers your loan-to-value (LTV) ratio.

Explore your deposit and LTV

Change any value and the other figures will update automatically.

Try an example: £250,000 home with a £25,000 deposit → 90% LTV

Property value

£40,000 £5,000,000

Changing the property value keeps the mortgage amount and recalculates your deposit or equity and LTV.

Deposit or equity

£0 £250,000

Mortgage amount

£0 £250,000

Loan-to-value

90%

0% 100%

Your loan-to-value

90%

A £225,000 mortgage on a £250,000 property.

90%

90% mortgage 10% deposit or equity

Search mortgages with these figures

Starts with a residential purchase. You can change the mortgage type and purpose in the search.

No mortgage borrowing needed

With these figures, the property value is fully covered by your deposit or equity. No mortgage borrowing is required.

Small mortgage amount

Fewer lenders offer mortgages below £25,000, so your options may be limited. Product and legal fees can also have a greater impact on the overall cost of a smaller mortgage.

Low property value

Fewer lenders offer mortgages on properties valued below £50,000. Minimum property values vary by lender and property type.

Buying to let?

If this is a buy-to-let purchase, most lenders cap borrowing at 75–80% loan-to-value, with some specialist options reaching 85%. This cap applies to buy-to-let mortgages only — residential lending typically extends to 95%.

High-LTV residential mortgage

Residential mortgages above 95% LTV have limited availability and often require a specialist mortgage product or scheme. Talk to your mortgage adviser about your options.

No deposit or equity buffer

You have no deposit or equity buffer. A fall in the property's value could leave you owing more than it is worth. No-deposit residential mortgages have limited availability and specific eligibility requirements. Speak to your mortgage adviser.

A £25,000 deposit on a £250,000 property leaves a £225,000 mortgage at 90% LTV. Interest-only availability still depends on lender criteria and your repayment plan.

A credible repayment vehicle

With interest-only, the capital does not reduce over time. Lenders will want confidence in how the balance will be repaid at the end of the term.

A repayment plan may involve options such as:

selling the property
switching to a repayment mortgage
using savings or investments
receiving funds from an inheritance or other lump sum

Lenders may treat different repayment methods differently. The key is having a plan that is clear, realistic, and supported by evidence where required.

Credit history

A strong credit record can matter more for niche products. If you have adverse credit, it may reduce the number of lenders willing to consider interest-only.

It’s also worth being mindful that multiple applications in a short period can affect your credit file. Review your credit report before applying.

Income and affordability

Even though interest-only can reduce monthly payments, lenders still assess affordability. Your income, existing commitments, and overall financial position will be reviewed.

Some lenders may also have minimum income expectations for interest-only, which can be a barrier for certain first-time buyers. In practice, interest-only borrowing can be more restrictive than repayment, even if the income multiple appears similar on paper.

Mortgage experience

Because interest-only is less common for first-time buyers, some lenders may prefer applicants with a track record of managing mortgage borrowing.

This doesn’t mean it’s impossible, but it can narrow the lender pool and increase the importance of presenting your case clearly.

What alternatives should first-time buyers consider?

If interest-only feels like a stretch, there are other ways to keep monthly payments manageable while still building equity.

Longer-term repayment mortgages

Extending the term can reduce monthly payments. Many borrowers consider longer repayment terms, then look to reduce the term later if their finances improve.

Part-and-part mortgages

A part-and-part structure splits the loan between repayment and interest-only. This can help balance affordability with capital reduction.

Switching strategy

Some buyers plan for a future move from interest-only to repayment once their circumstances improve. If this is part of your thinking, it’s important to understand how switching would work in practice and whether it would be feasible at the time.

How a broker can help with an interest-only application

Because interest-only lending for first-time buyers is niche, the process can be more complex than applying for a standard repayment mortgage.

A broker can help by:

checking which lenders are likely to consider your circumstances
understanding how your repayment plan will be viewed
helping you avoid unnecessary applications that could weaken your credit position
comparing interest-only with other structures that may achieve similar affordability goals

A well-prepared application matters in this category. Presenting the right information clearly can be the difference between a lender accepting or declining.

82+ lenders

The lender list does not indicate that every lender offers interest-only mortgages to first-time buyers.

Lowest Rate First-Time Buyer Interest-Only Mortgages

View more First-Time Buyer Interest-Only offers

Illustrative first-time buyer purchase products filtered to interest-only repayment. Rates are not a guarantee of eligibility: lender criteria, deposit and repayment-plan requirements still apply.

If you’re considering interest-only, it’s worth approaching it as a structured plan rather than a short-term affordability fix.