If you’re currently on an interest only mortgage for a Buy to Let property in Ireland, this guide is for you. Most Irish lenders only offer interest only mortgages on Buy to Let properties, not homes you plan to live in. So, unless you’re a landlord or property investor, you can skip this.
Now, for landlords or property investors still with us: are you asking yourself, “Can I change my interest only mortgage to repayment?” The answer is yes. Many investors are switching from interest only to repayment mortgages to build long-term security. A capital and interest mortgage (another name for repayment) not only covers interest but also reduces the loan balance every month. This switch often comes into focus as retirement approaches or when income levels shift.
The difference between interest only and repayment mortgages
Before we dive into switching your buy to let intertest only mortgage, it is worth understanding the difference between interest only and repayment mortgage options. Here’s a side-by-side comparison to make it clear:
| Feature | Interest Only Mortgage | Repayment (Capital & Interest) Mortgage |
| Monthly Repayments | Lower | Higher |
| What You Pay | Only the interest | Interest + capital |
| Equity Growth | None (unless property appreciates) | Yes, you build equity each month |
| End-of-Term Balance | Full loan amount still owed | Loan fully paid off |
| Financial Certainty | Less predictable | More predictable and structured |
In short, changing from an interest only mortgage to repayment means higher monthly payments, but you’re paying down the loan itself and building equity. With an interest only mortgage, repayments are lower, but the capital remains untouched, leaving you with the same balance at the end of the term.
Can I get an interest only mortgage on my home (non-investment)?
In Ireland, lenders generally do not allow interest only mortgages for homes you live in. These are mainly available on Buy to Let properties, not owner-occupied residences. In rare cases, such as self-build projects or when a borrower needs to ease financial pressure during the early years of homeownership, a lender may approve interest only payments for a limited time.
Still, these situations are exceptions, not the rule. Most residential homeowners will be required to take the capital and interest repayment route.
Reasons for switching from interest only to repayment
There are several very sensible reasons why landlords and investors decide to switch from an interest only to a repayment mortgage:
- Approaching retirement without a repayment plan
Relying only on interest payments means the loan remains outstanding. Without switching, you might be forced to sell your investment property just to clear your mortgage. - Worried about repaying the capital
If you plan to hold onto the property into retirement for extra income, you’ll need a strategy to clear the mortgage. Switching to a repayment mortgage gives you a clear path to paying off the loan. - Your own income or the property rental income has increased
A rise in your income or rental yield can make it possible to manage the higher monthly repayments of a capital and interest mortgage. - Lender restrictions
Some banks and lenders may change their policies and push borrowers to move from interest only vs repayment mortgages, making it harder to remain on interest only. - Build equity faster
Switching from an interest only mortgage to repayment means you’re paying down the loan itself, helping you own a greater share of the property each month.
Steps for changing from interest only mortgage to repayment
If you’re ready to change your buy to let interest only mortgage to a repayment, here are the main steps to follow:
- Check your mortgage terms
First, review your existing mortgage agreement carefully. Are there any restrictions or fees for changing your repayment structure? Knowing your lender’s policies is essential. - Contact your lender or mortgage broker
A direct conversation with your lender or a trusted mortgage broker (like us at MortgageLine!) will clarify your options. In some cases, your current lender will allow the switch without requiring a full remortgage. - Run the numbers
Understand how your monthly payments will change. A good broker will help you assess affordability and whether this switch aligns with your financial goals. - Consider remortgaging
If your current lender doesn’t allow the switch or if better rates are available elsewhere, switching your mortgage to a better deal might be a smarter move.
Want to explore more on this? See our guide: can you switch your mortgage to another bank.
- Complete the application
Once you’ve chosen the best route, fill in the paperwork and submit your application. You may need to submit updated bank statements, and proof of income.
Tips for a smooth switch
Making the move from a Buy to Let interest only mortgage to repayment is a significant step for many landlords. The process doesn’t have to be difficult though. With some forward planning and the right advice, switching to a capital and interest mortgage can be straightforward. Below are some practical tips to help you manage the change smoothly.
- Start early – Don’t leave it until your mortgage term is up. If you’re on a Buy to Let interest only mortgage, plan your move to repayment well in advance so you have more flexibility.
- Speak to a mortgage broker – A broker can compare options across lenders and explain whether changing from a Buy to Let interest only mortgage to repayment is possible with your current provider or if a remortgage would be better value.
- Align with your goals – Your mortgage should work for you. Think about why you’re making the switch. Are you looking to build equity for retirement, or simply reduce risk? Make sure the higher capital and interest mortgage repayments fit your income and long-term plans.
- Read the fine print – Always review your mortgage agreement closely. Some lenders place conditions when switching mortgages, so it’s important to know what applies before you commit.
Interest only vs repayment mortgage: which one works for you?
Here’s a simple comparison table that shows the difference between interest only and repayment mortgage options for Buy to Let landlords and investors:
| Feature | Interest Only | Capital & Interest |
| Monthly Cost | Lower | Higher |
| Ownership | No equity built | Increasing equity |
| End of Term | Still owe the full balance | Mortgage paid off |
| Risk | Higher – depends on property value | Lower – debt reduces over time |
| Flexibility | Good for cashflow | Better long-term planning |
Everyone’s financial journey is different. What works for one investor may not work for another. Some prefer the short-term cashflow benefits of an interest only Buy to Let mortgage, while others value the security of a repayment (capital and interest) mortgage. Understanding the differences between capital and interest only mortgages is key to making the right call when deciding which one is right for you.
MortgageLine: Expert help for landlords when switching Buy to Let mortgages
At MortgageLine, we specialise in helping Irish property investors and landlords navigate tricky mortgage decisions. Whether you’re considering switching from a Buy to Let interest only mortgage to repayment, wondering if you can save by switching mortgage or simply want to explore the benefits of switching mortgage, we’re here to guide you.
We’ll break down your options, crunch the numbers, and help you make the switch with confidence. Oh, and we’ll explain everything in plain English, with no financial jargon or pushy sales pitch.
Contact us today for a free mortgage review call.
FAQs
How to get out of an interest-only mortgage?
You can exit an interest only mortgage by switching to a repayment plan with your current lender, remortgaging with another provider, or paying off the balance in full. For landlords, this often means switching a Buy to Let interest only mortgage to repayment.
Should I pay off my interest-only mortgage?
If you want to own your property outright or reduce financial risk, then yes, switching to a repayment plan is a smart idea. It all depends on your long-term goals.
Can I remortgage my interest-only mortgage?
Yes. Many lenders allow you to remortgage from interest only to a repayment mortgage or even secure a better rate. It’s worth comparing offers, especially if your current deal is expiring.
