In brief: Most buy-to-let mortgages are interest-only: you pay just the interest each month and repay the loan when you sell or refinance. As at 2 November 2026, the cheapest 5-year buy-to-let fix at 75% LTV on our panel is 5.64% with no fee, about £940 a month in interest per £200,000 borrowed.
Why most landlords choose interest only
On an interest-only buy-to-let mortgage you pay only the interest each month, and the loan itself is repaid at the end of the term. That keeps monthly payments far lower than on a repayment mortgage, as the calculator shows, which improves cashflow and makes the lender's rent test easier to pass.
How you repay the loan
Lenders want a credible repayment strategy, and for buy-to-let that's usually selling the property. Some landlords sell one property to clear the debt on others, or switch part of the loan to repayment later. Interest-only only works long term if the property is still worth more than the loan when the term ends.
Interest only vs repayment
- Interest only: the lowest monthly cost and the most cashflow, but the debt doesn't go down. You're relying on the property's value.
- Repayment: the debt is cleared by the end of the term, but you pay a lot more each month, which can squeeze cashflow and fail the rent test.
- Part and part: some lenders allow a split, with part of the loan on repayment and part on interest only.
Tax
How mortgage interest is taxed depends on whether you own personally (a 20% tax credit under Section 24) or through a limited company (a full deduction). Speak to your accountant.
Who can get an interest-only buy-to-let mortgage?
Most buy-to-let lenders offer interest only as standard, to personal borrowers and to limited companies. They look at three things:
- The rent. It must pass the rent test: usually 125% of the interest for limited companies and basic-rate taxpayers, or 145% for higher-rate taxpayers, at the lender's stress rate. Lenders already run this test on an interest-only basis, so interest only does not make it harder to pass.
- The deposit. Most lenders offer interest only up to 75% loan to value, and several go to 80%. See the deposit guide and 80% LTV buy-to-let.
- The repayment plan. For buy-to-let, selling the property at the end of the term is normally enough. Some lenders also ask for a minimum personal income, or that you own your own home.
Interest-only buy-to-let payments
| Loan | Interest only | Repayment, 25 years | Difference a month |
|---|---|---|---|
| £150,000 | £656 | £899 | £243 |
| £200,000 | £875 | £1,198 | £323 |
| £250,000 | £1,094 | £1,498 | £404 |
| £300,000 | £1,312 | £1,798 | £486 |
Monthly payments at 5.25%, before fees. On interest only, the full loan is still owed at the end of the term.
See what the rent supports in the buy-to-let mortgage calculator, and how much you'll need to put down in our deposit guide.
Frequently asked questions
Are most buy-to-let mortgages interest only?
Yes. Most landlords choose interest only to keep payments low and cashflow strong, planning to repay the loan from a sale.
Do I need a repayment plan for an interest-only buy-to-let?
Lenders expect one. For buy-to-let, selling the property is normally accepted, but you'll need to be sure the property will be worth more than the loan.
Can I switch from interest only to repayment later?
Usually yes, at a product change or remortgage, subject to affordability and the rent test.
Is interest only cheaper than repayment?
Monthly, yes, by a lot. Over the whole term you pay more interest, because the loan balance never falls.