Repayment vs Interest-Only Buy-to-Let: Which Costs More in Total?

The cheaper monthly payment is not always the cheaper mortgage. This guide compares repayment and interest-only on the same loan so you can see the trade-off.

What is the Buy-to-Let Mortgage Repayment Calculator?

Repayment and interest-only are the two ways to structure the same buy-to-let loan, and they trade monthly cost against what is left owing. A repayment payment covers interest plus a slice of capital, so the debt is cleared by the end of the term but the monthly bill is higher. An interest-only payment covers just the interest, so the monthly bill is lower but the full loan is still owing at the end and must be repaid by selling, remortgaging or other funds. This calculator prices both on the same loan, rate and term, assuming the rate never changes, so the long-term totals are illustrations rather than promises.

How to use it

1. Enter the loan amount, the interest rate and the term.
2. Click Compare Repayment Options to see both structures side by side.
3. Compare the monthly payment against the total interest and the balance left at the end.

Worked example

A £180,000 loan at 5.5% over 25 years costs about £1,105 a month on repayment, with about £151,600 of total interest and a zero balance at the end. Interest-only costs about £825 a month, with about £247,500 of total interest and the full £180,000 still to repay.

Why does interest-only cost more interest overall?

Because the balance never falls, every month's interest is charged on the full loan. On a £180,000 loan at 5.5% over 25 years that adds up to roughly £247,500 of interest, against roughly £151,600 when the balance shrinks each month on repayment.

Frequently asked questions

Does the rate really stay fixed for the whole term?

Usually not. Most deals fix the rate for 2 to 5 years and then move to a variable rate, so this calculator's long-term totals are illustrations that assume one rate throughout.

Can I switch between repayment and interest-only later?

Often yes, at remortgage or by agreement with the lender, but the lender will reassess affordability and the property at that point.

Try the Buy-to-Let Mortgage Repayment Calculator free · All guides