You can get an interest‑only mortgage without a standard repayment vehicle
Isaac Barco
Investment portfolios, cash savings, business assets, even premium bonds. A significant number of UK lenders will accept these as a legitimate way to repay an interest-only mortgage. The problem is that most borrowers and many brokers never think to ask.
Why interest-only has a reputation problem
Interest-only mortgages fell out of favour after the financial crisis, when thousands of borrowers reached the end of their mortgage term with no credible plan to repay the capital. Lenders tightened their criteria dramatically, and the product became associated in the public mind with risk and poor planning.
That reputation has stuck, unfairly, for a large group of borrowers. Because for the right client, an interest-only mortgage is not a financial shortcut. It's a deliberate, intelligent strategy. Lower monthly payments preserve cash flow. Capital stays invested rather than being tied up in bricks and mortar. And for borrowers with significant wealth outside their property, repaying the capital at the end of the term is not the problem it would be for someone relying on house price growth alone.
The question is: what does a lender actually accept as a credible repayment plan?
The standard repayment vehicles and their limits
Most people are aware of the usual options. Sale of the mortgaged property is the most common. Sale of another property, ISAs, endowments, and pensions round out the standard list. These are well understood, widely accepted, and straightforward to evidence.
But what if none of those fit your situation? What if your wealth sits in an investment portfolio? What if you're planning to sell a business? What if you hold significant cash savings that aren't in an ISA wrapper? What if you have premium bonds, or UK shares, or a managed fund?
This is where most borrowers hit a wall, not because lenders won't consider these assets, but because neither the borrower nor their broker thought to ask.
The reality: a meaningful number of UK lenders will consider other assets
When you look at the full UK residential mortgage market, just over 37 of them will consider assets beyond the standard repayment vehicles as a legitimate way to repay an interest-only mortgage. That's fewer than half. But it includes some significant names, and crucially, it includes lenders with genuine flexibility around what those assets can be.
Importantly, the lenders who say no include most of the household names, Barclays, NatWest, Halifax, Santander, Nationwide etc. If you walk into a high street bank or approach a generalist broker, the odds are you'll be told this isn't possible. That's not because it isn't — it's because the broker isn't looking in the right place.
What assets are actually accepted?
Across the lenders who do accept other assets, a clear picture emerges of what works — and what doesn't.
The most widely accepted non-standard assets include UK-based investment portfolios, stocks, shares, unit trusts, OEICs and investment bonds. Most lenders apply a 'haircut' to the current value, typically accepting 70–80% rather than face value, to account for market movement. Cash savings held in UK accounts are broadly acceptable, as are premium bonds. Several lenders will also consider the proceeds from a planned business sale, with Teachers Building Society explicitly listing this as an acceptable strategy alongside managed portfolio funds.
A consistent rule across almost every lender: assets must be held in the UK and denominated in sterling. Foreign investments, offshore accounts, and assets held in foreign currencies are not acceptable repayment vehicles even at lenders with otherwise flexible criteria.
The restrictions that matter
Alongside what's accepted, it's worth being clear about what isn't. Clydesdale, for example, explicitly rules out inheritance, sale of a business, future bonus payments, and reliance on house price growth. Harpenden Building Society won't accept savings or investments held in trust, or shares of property owned jointly with a non-applicant. Several lenders require repayment vehicles to have been in place for a minimum period, Kensington and Metro Bank both stipulate at least 12 months.
Loan-To-Value (LTV) also comes into play. Many lenders restrict interest-only to lower loan-to-value ratios when non-standard repayment vehicles are involved, Lendinvest caps interest-only at 70% LTV under this approach, while Stafford Building Society applies different limits depending on whether the mortgage is full interest-only or part-and-part.
Several lenders in this space including Furness Building Society, Bath Building Society, West One Loans, and The Co-operative will only consider non-standard repayment vehicles on a referral basis. This means your broker needs a direct relationship with the lender to even get the conversation started.
Why this matters more than most people realise
For the right borrower, interest-only with an asset-based repayment vehicle isn't a workaround. It's a coherent financial strategy. Consider a business owner in their 50s with a substantial investment portfolio and a £600,000 mortgage. Switching to interest-only reduces their monthly outgoings significantly, while their portfolio, untouched and continuing to grow remains the planned repayment vehicle at the end of the term. The maths can be compelling.
The broker's role
This is an area where the difference between a generalist broker and a specialist one is stark. The knowledge of which lenders accept which assets, at which LTV, with what minimum values and what documentary evidence, takes years to build and it changes as lenders update their criteria. Getting it wrong doesn't just mean a declined application. It can mean an application going to the wrong lender, a mark on a credit file, and a frustrated client.
Getting it right means a client who keeps their cash flow intact, their investments working, and their mortgage structured around their actual financial life, not squeezed into a framework designed for someone else.