Switch to an interest only mortgage

Struggling with your monthly mortgage payments and need a respite?  One way we could help is to switch your mortgage to interest only temporarily for six months.

But before you decide on your next steps, it’s important to understand how an interest only mortgage works.  Once your six months ends, you’ll have to make payments towards your outstanding mortgage balance that weren’t made during the interest only period. 

This means your monthly repayments will be higher and ultimately, you’ll pay more interest. 

So, if you can afford to keep paying off your mortgage on a repayment basis, you should do.  

Am I eligible?

You may be eligible to switch your mortgage to interest only temporarily if you:

  • Are a residential mortgage customer (you live in the home you’re paying a mortgage on, rather than renting it out)
  • Don’t have any arrears on your mortgage (arrears means you’re behind in your mortgage payments)

What is interest only?

With an interest only mortgage, your monthly mortgage payments only cover the interest on the money you’ve borrowed. You don’t pay anything off the outstanding mortgage balance. 

This means your monthly payments will be cheaper than repayment, but your loan won’t go down over the six months you’re on interest only. Once the six-month period ends, you’ll have to make up any payments to pay off your mortgage loan that weren’t made under interest only. 

How will this affect my payments?

Once your six-month Interest Only period ends, your monthly mortgage repayments will increase, and you’ll end up paying more interest by the end of your full term than you would have under your original plan. The below example shows how payments would be broken down if you had an outstanding mortgage balance of £100,000, paying interest of 5% and with 10 years left on your mortgage.

  • Original monthly repayment is £1,061.
  • After switching to Interest Only, monthly repayment is £417
  • Once the six-month period ends, monthly repayment is £1,104

In this case, £3,904 hasn’t been paid off your outstanding loan during the six months and would still need to be paid over the rest of your mortgage term.  Let’s assume you’ll stay on this rate for a further 18 months and then move onto our Residential Mortgage Variable Rate (currently 6.54%). By the end of your mortgage term, you’d end up paying around £1,333 more interest than you would have under your original plan.

This is for illustrative purposes only and assumes no other changes to the mortgage over the remaining term. 

Interest only calculator

Our Interest Only calculator will help you compare the cost of your mortgage on repayment or Interest Only methods.

You'll need to know:

  • Current interest rate of your mortgage
  • Current remaining mortgage balance - you can find this out by logging onto Skipton Online or our app and viewing your mortgage balance
  • Term you currently have remaining on your mortgage

What happens after six months?

If you decide to go ahead with temporarily switching to Interest Only payments, we’ll switch your mortgage back to its original payment method. Then, we’ll recalculate your monthly payments based on the outstanding balance and remaining term at the time. Your monthly payments will be higher than before the interest only arrangement. This will make sure your mortgage balance is paid off by the end of the term, and we'll advise you of this at the time.

We won't provide advice or suggest any course of action as being suitable for your needs. If you haven't already done so, you should seek independent debt advice. For information about organisations that can help, please see our helpful contacts on our mortgage payment difficulties page .

Switch to interest only online

To change to interest only, please complete the Transfer to Interest Only Mortgage Charter form.

Please be aware that you won’t be protected under the Financial Conduct Authority rules of assessing suitability and will not be eligible to claim for compensation under the advice element of the Financial Services Compensation Scheme (FSCS) protection.

Request transfer

Frequently Asked Questions

No, it won’t affect your credit score, and you won’t need to do a new affordability check if you extend your mortgage term or switch to interest only for six months (as per the government Mortgage Charter). You can find more information in our Credit Scoring Guide [PDF].

If you do fall behind with your payments, your credit file will only be impacted if you miss a full monthly payment.

You’ll be able to find your current mortgage balance by logging into your Skipton Online account or using our app and selecting your mortgage on screen.

Or you can call our friendly mortgage team on 0345 850 1711.

No, only one option can be taken.

You’ll be able to change back to your original terms within six months, with no affordability check and no credit file impact. For Interest Only transfers, at six months we'll switch your mortgage back to its original payment method and recalculate your monthly payment based on the outstanding balance and remaining term at the time.

When your Interest Only arrangement ends, your monthly payment will be higher than it was before the arrangement. This will make sure that your mortgage balance is paid off by the end of the term. Please contact us on 0345 607 9817 for more information.

Under these circumstances, we’ll be unable to switch your mortgage to interest only. If you’re experiencing any difficulties right now, our mortgage payment difficulties page could help point you in the right direction. Or you can call our friendly team on 0345 850 1766 to find out how we could help.