Can self-employed people get an interest-only mortgage?
General information only. This is not financial advice.
Last reviewed: 2026-06-06
Can self-employed people get an interest-only mortgage?
Yes. Self-employed people can get interest-only mortgages in the UK, though the criteria are stricter than for repayment mortgages. Lenders typically require a minimum deposit of 25–40%, a credible repayment vehicle such as investments, a pension, or a property sale plan, and evidence of sufficient income assessed in the same way as any self-employed mortgage application. Specialist lenders who understand complex income are most likely to offer interest-only products to self-employed applicants.
How is income assessed differently for an interest-only mortgage?
Income is assessed the same way as for a repayment mortgage — net profit for sole traders, salary plus dividends (and sometimes retained profits) for limited company directors. The interest-only monthly payment is lower than a repayment equivalent, which can make it easier to pass affordability checks. However, lenders still require confidence that you can repay the full capital at the end of the term, so total income and asset levels matter beyond just the monthly payment capacity.
What repayment vehicles do lenders accept?
Lenders require a credible plan to repay the capital at the end of the mortgage term. Accepted repayment vehicles typically include: ISAs or investment portfolios with a projected value at maturity; pension lump sums (subject to tax-free cash limits at the time of repayment); sale of the mortgaged property (accepted by some lenders, particularly for higher-value properties); sale of another property; and endowment policies still in force. Lenders assess both the type and current value of your repayment vehicle alongside the income assessment.
What deposit do I need for a self-employed interest-only mortgage?
Most lenders require a minimum deposit of 25%, giving a maximum loan-to-value of 75%. Some lenders require 40% or more, particularly for complex income profiles or higher loan amounts. A larger deposit widens your lender options, reduces your rate, and makes it easier to demonstrate sufficient equity in the property — which is a key part of the interest-only risk assessment.
Are interest-only mortgages still available in the UK?
Yes. Interest-only mortgages remain available in the UK, particularly for higher-value properties, larger deposits, and applicants with credible repayment plans. Mainstream lenders tightened their interest-only criteria significantly after the Financial Conduct Authority introduced stricter affordability rules following the 2008 financial crisis. Specialist and private lenders remain active in this market, especially for complex income applicants who can demonstrate strong overall financial resilience.
Can I switch from interest-only to repayment later?
Yes. Most lenders allow you to switch from interest-only to full or partial repayment during the mortgage term. This may require a new affordability assessment if the monthly payment increases significantly. Reviewing the switch periodically — particularly as income grows — is worthwhile: moving to full repayment means you will own the property outright at the end of the term without relying on the repayment vehicle to clear the capital balance.
Risk warning
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. With an interest-only mortgage you are not reducing the capital balance — you must have a credible plan to repay the full loan at the end of the term. This article is general information only and does not constitute financial advice.
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