Interest‑Only Mortgages for High Earners: When It Makes Sense
DIRECTOR AND MORTGAGE ADVISER
Specialist broker for high-earning professionals and complex income cases.
Used well, interest‑only (IO) is a cash‑flow tool for high earners—smoothing lumpy income (bonuses, partner profits, RSUs) and aligning lump‑sum capital reductions to real timelines. Used badly, it’s a headache at maturity. Here’s how to decide if IO is right for you, and how to structure it so lenders say yes.
Quick Takeaways
IO isn’t just for buy‑to‑let. Many residential lenders allow full or part interest‑only for the right profile.
Expect caps on IO loan‑to‑value (LTV) and approved repayment plans (e.g., investments or sale of property). The rest can sit on capital repayment (part & part).
Minimum income thresholds and age/term limits often apply. Policies vary widely by lender.
Affordability is still stress‑tested—often on a capital‑and‑interest basis, not the IO payment.
Request your fee free mortgage consultation today. No obligation, just sound advice.
When Interest‑only Actually Makes Sense
You have lumpy, predictable cash flows (partner distributions, annual bonus, RSU vesting) and want to plan staged capital reductions.
You value liquidity (school fees, investing, building a buffer) and are comfortable managing a clear repayment strategy.
You’re at prime/super‑prime values and want to keep payments efficient while you complete refurbishments, sell a second asset, or align a bonus/carry event.
What Lenders Typically Allow
Rules vary—these are common themes across mainstream and specialist lenders.
Maximum IO LTV: frequently 50–75%. Above that, any extra borrowing is usually on capital repayment.
Minimum income (often): many lenders look for £75k+ sole or £100k+ joint (some have no minimum, depending on the repayment plan).
Term & age: residential IO terms often max 25–40 years, and many lenders won’t let IO run beyond retirement age.
Repayment plans: sale of property (with minimum equity rules), stocks & shares/ISAs/investments, sale of another property, and—in some cases—pensions (with restrictions).
How We’ve Helped Clients Like You
These clients faced similar challenges - here’s how we helped them secure the right deal.
Repayment Strategies Lenders Accept (And How To Evidence Them)
1) Sale of the mortgaged property (downsizing later)
Commonly capped at 50% IO LTV with a minimum equity requirement at outset (thresholds vary by region/lender).
Evidence: current property value, equity calculation, and acknowledgement you’ll sell at term end.
2) Investments (stocks & shares, ISAs, bonds)
Lenders tend to accept listed, liquid portfolios (often discounted in calculations). Evidence includes statements within 12 months and proof the assets are sterling‑denominated where required.
3) Sale of other property (not your home)
Some lenders accept this with equity tests (e.g., equity ≥ a set % of the IO amount) and ownership proof.
4) Bonuses/profit distributions/RSUs
Usually not acceptable as the sole IO repayment plan—but useful to schedule staged capital reductions on a part‑and‑part structure.
Reality check: Lenders will periodically re‑verify repayment plans and can ask you to switch some/all of the loan to repayment if the plan no longer stacks up.
Part & Part: The Sensible Compromise?
A part & part mortgage splits borrowing between interest‑only and capital‑repayment. It keeps monthly payments efficient while de‑risking the balance over time.
Example: On a £1.5m loan at 70% LTV, you might place £750k on IO (supported by investments or planned downsizing) and £750k on repayment to steadily reduce the balance.
Speak To An Expert Today
Get in touch for a fee free, no-obligation chat about how we might be able to help you.
Common Interest Only Application Pitfalls
Vague repayment plans. “I’ll figure it out later” doesn’t pass underwriting.
Assuming all lenders allow sale of main residence. Some don’t; others require specific equity thresholds.
Letting short‑term debts stack up. High card balances/PCP drag affordability even for high earners.
Pushing IO beyond retirement without robust retirement‑age income.
What To Prepare (Document Checklist)
Income: payslips/P60 or SA302s + partnership accounts; bonus/RSU schedules; employer/accountant letters.
Assets: investment statements (≤12 months old), property schedule, evidence of equity.
Plan detail: which asset(s) will clear capital, when, and how we’ll evidence progress over the term.
What Our Clients Say
How Kite Mortgages Structures Interest Only Mortgages
Profile first: income mix, equity, liquidity and time horizons.
Select the right lender: map IO LTV caps, minimum income thresholds and acceptable plans to your profile.
Design the deal: agree the IO/repayment split, build the evidence pack, and time completion around bonuses, partner profit dates or vesting.
Request your fee free mortgage consultation today. No obligation, just sound advice.
FAQs
-
Often on a repayment basis, so don’t assume lower monthly IO payments boost affordability.
-
Sometimes at lower LTVs with a strong repayment plan; many clients prefer part & part.
-
Pensions are often not acceptable; bonuses/RSUs usually support staged reductions, not the sole plan.
-
Some lenders require GBP‑denominated assets and may haircut FX values—policy varies.
Related Articles
YOUR HOME MAY BE REPOSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE
Kite Mortgages is a trading style of Kite Financial Ltd which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
APPROVED BY THE OPENWORK PARTNERSHIP ON 19/09/2025.