How much cheaper is interest-only?

Monthly payments are typically 30-40% lower than repayment mortgages. On a £500,000 mortgage, you could save £1,000+ per month.

What repayment strategy do I need?

Most lenders accept property sale, refinancing, or demonstrable savings/investments. The strategy must be credible and documented.

Can I switch from interest-only to repayment?

Yes, most lenders allow you to switch to repayment during the term. This can be a good strategy as your business grows or your financial position strengthens.

Is interest-only available for owner-occupied commercial?

Yes, though lenders are more cautious. They'll want a particularly strong repayment strategy since you can't simply sell the property your business operates from.

Interest-Only Commercial Mortgages

Interest-only commercial mortgages reduce monthly costs and improve cash flow. We find lenders offering competitive interest-only commercial products.

Interest-Only Commercial Mortgages

Interest-only commercial mortgages let you pay only the interest each month, with the capital balance repaid at the end of the term — typically through property sale, refinancing, or other means. This significantly reduces monthly costs and can improve cash flow for businesses and investors. Most commercial lenders offer interest-only options, though they require a credible repayment strategy.

Lower monthly payments improving cash flow
Repayment strategy guidance and planning
Both full interest-only and part-and-part available
Commercial investment and owner-occupied options
free initial commercial mortgage advice

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Your home may be repossessed if you do not keep up repayments on your mortgage.

How Interest-Only Commercial Mortgages Work

You pay only the interest on the loan each month — no capital repayment. On a £500,000 commercial mortgage at 6%, monthly payments would be approximately £2,500 (interest-only) versus £3,600 (capital and interest over 20 years). The full £500,000 capital is repaid at the end of the term.

Repayment Strategies

Lenders require a credible repayment plan. Common strategies include selling the property, refinancing to a new mortgage, using business profits or other investments, or switching to a repayment mortgage later in the term. Some lenders accept multiple strategies.

Part-and-Part Options

Some borrowers choose a 'part-and-part' approach — paying interest-only on a portion of the loan while making capital repayments on the rest. This balances cash flow needs with gradual debt reduction.

When Interest-Only Makes Sense

Interest-only is particularly suitable for commercial property investors (where rental income covers interest and capital appreciation provides the exit), businesses that need to preserve cash flow, and short-term holds where the property will be sold or refinanced within 5-10 years.