When we introduced repayment mortgages, we also shared the Mortgage Playground: somewhere to change a loan amount, interest rate or repayment term and see what happens to the numbers.

We have now extended the Playground to model interest-only mortgages too. Interest-only lending was already supported by Mortgage Smart Schedules; this brings it into the same space for experimenting with mortgage calculations.

Seeing what the monthly payment covers

Choose Interest-only from the mortgage type dropdown, enter the loan amount and annual interest rate, then choose how many years you want to model. Leave the monthly payment blank and the Playground calculates it for you.

The form now explains the calculation, with a worked example:

£100,000 × 6 (%) ÷ 100 ÷ 12 = £500 per month.

Over a two-year modelling period, that gives £12,000 in interest payments. The balance owing at the end is still £100,000: those monthly payments cover interest, with no capital repayment.

The results show that distinction month by month, alongside the totals and the balance remaining at the end of the modelled period. A smaller monthly payment is only part of the picture; seeing the outstanding loan alongside it helps explain what the model is doing.

Choosing the period you want to explore

For an interest-only mortgage, you might want to look at a two- or five-year fixed-rate period. You can also enter the full mortgage term or another period you want to investigate. A modelling period is required so the Playground knows where to stop.

This prompted a useful improvement for repayment mortgages as well: the full repayment term and the modelling period are now separate inputs.

For example, you can calculate repayments over a remaining term of 25 years while viewing just the first five years. The monthly payment still uses the 25-year term, while the table, chart and totals cover the five years you selected. The closing balance shows how much would still be owing at that point.

That distinction matters. Looking at five years of a mortgage should not accidentally turn the calculation into a mortgage that must be repaid within five years.

Exploring a change in rate

Once you have calculated a schedule, you can enter a rate change against a month and recalculate to see the original and adjusted figures side by side.

Using the £100,000 example, increasing the rate from 6% to 12% after the first year changes the calculated monthly interest payment from £500 to £1,000 for the second year. Total interest over the two years rises from £12,000 to £18,000, while the loan balance remains £100,000.

You can also enter your own monthly payment. In interest-only mode, this is a fixed payment override: the model uses that amount even when you add rate changes, and it still records no capital repayment. Leave it blank when you want to explore how changing rates affect the calculated payments.

A clearer starting point

We have also reorganised the form around your loan, your time frame and your payment. The guidance changes with the mortgage type, keeping the relevant explanation close to the field it describes.

The aim remains the same: make it easier to follow the numbers and try a different assumption. Extending the Playground to interest-only mortgages also helped us make the distinction between a loan’s repayment term and the period being explored clearer for everyone.

Try it in the Mortgage Playground.