Interest-Only Commercial Mortgages
Interest-only commercial mortgages reduce monthly costs and improve cash flow. We find lenders offering competitive interest-only commercial products.
Interest-Only Commercial Mortgages
Interest-only commercial mortgages let you pay only the interest each month, with the capital balance repaid at the end of the term — typically through property sale, refinancing, or other means. This significantly reduces monthly costs and can improve cash flow for businesses and investors. Most commercial lenders offer interest-only options, though they require a credible repayment strategy.
- Lower monthly payments improving cash flow
- Repayment strategy guidance and planning
- Both full interest-only and part-and-part available
- Commercial investment and owner-occupied options
- 100% fee-free commercial mortgage advice
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Your home may be repossessed if you do not keep up repayments on your mortgage.
How Interest-Only Commercial Mortgages Work
You pay only the interest on the loan each month — no capital repayment. On a £500,000 commercial mortgage at 6%, monthly payments would be approximately £2,500 (interest-only) versus £3,600 (capital and interest over 20 years). The full £500,000 capital is repaid at the end of the term.
Repayment Strategies
Lenders require a credible repayment plan. Common strategies include selling the property, refinancing to a new mortgage, using business profits or other investments, or switching to a repayment mortgage later in the term. Some lenders accept multiple strategies.
Part-and-Part Options
Some borrowers choose a 'part-and-part' approach — paying interest-only on a portion of the loan while making capital repayments on the rest. This balances cash flow needs with gradual debt reduction.
When Interest-Only Makes Sense
Interest-only is particularly suitable for commercial property investors (where rental income covers interest and capital appreciation provides the exit), businesses that need to preserve cash flow, and short-term holds where the property will be sold or refinanced within 5-10 years.
Interest-Only Commercial Mortgages — FAQs
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