Interest-only mortgages developed a poor reputation for good reason: too many were sold without a credible plan to repay the capital. But used deliberately, by the right borrower, interest-only remains a perfectly sound arrangement, and for some it is the most sensible option available.
Where it fits
It suits borrowers with lumpy or asset-based wealth: those whose income arrives as bonuses or carried interest, investors managing cash flow across a portfolio, or high-net-worth clients borrowing against assets they do not want to liquidate. The common thread is a clear, evidenced repayment strategy.
What lenders want to see
The credible repayment plan is everything, sale of another asset, investment proceeds, or downsizing at a defined point. Private banks and specialist lenders are far more comfortable here than the high street, provided the exit is real and documented.
This article is for information only and does not constitute financial advice. Interest-only mortgages require a credible strategy to repay the capital. Your home may be repossessed if you do not keep up repayments on your mortgage.