First-time buyers can now secure interest-only mortgages with Nationwide Building Society.

Britain's biggest mutual already offered interest-only deals to some customers, but has now made them available to more. 

Borrowers can now get an interest-only mortgage with a deposit of 25 per cent, or as little as 15 per cent on a part interest-only, part repayment option. 

With an interest-only mortgage, borrowers only pay the interest each month, with the loan amount remaining the same.  

This differs from a typical repayment mortgage where they pay back a part of the loan, as well as the interest, each month until they eventually pay off the mortgage.

With interest-only, the monthly payments will be lower - but at the end of the mortgage term, the full amount borrowed will need to be repaid in one lump sum.

Nationwide's lowest repayment mortgage rate for someone buying with a 25 per cent deposit is 3.99 per cent, with a £999 fee. 

On a £200,000 mortgage, a 3.99 per cent rate and 25 year term, a borrower on a standard repayment deal would pay £1,054 a month. 

However, if that same borrower opts to go interest-only, their monthly payments would drop to £664.

With any interest-only mortgage, it is vital to have a plan to repay the borrowing at the end of the term.

Previously, Nationwide only accepted selling the home at the end of the mortgage term as an acceptable way to repay the loan.  

However, Nationwide is now expanding repayment options to include UK-based savings, investments, pension funds and other properties. 

There are some additional eligibility hoops that borrowers will need to jump through to get this interest-only mortgage. 

They'll need a minimum income of £75,000 if applying for a mortgage alone, or at least £100,000 if a joint application, unless one applicant earns at least £75,000. 

Borrowers can opt for a maximum term of 40 years, up from 25 years, but this will be limited by a person's expected retirement age.

Those who don't meet the interest-only criteria could still get a part-interest only deal.

For this they'll either need to be buying with at least a 15 per cent deposit or remortgaging with at least 15 per cent equity in their home.

They'll also need to use a mortgage broker to qualify for the deal. 

Carlo Pileggi, head of mortgage products at Nationwide, said: 'Interest-only can be a great option for customers who have a suitable repayment vehicle and want the flexibility provided by lower monthly payments.'

Should you consider an interest-only mortgage?

Interest-only mortgages were much more easily available before the financial crisis, but banks tightened the reins after some borrowers saw the value of their homes fall and couldn't repay their loans. 

Some are now offering them again, but with much stricter checks. 

While they will not be suitable for everyone, if used responsibly an interest only mortgage can be a temporary lifeline, or even a profitable financial tool. 

For home buyers or homeowners facing the prospect of higher rates, an interest- only deal could provide some breathing space for their household budget.

However, if they don't have a plan to eventually repay the loan, this should only be used as a temporary measure and they should switch back to a repayment mortgage as soon as they are able. 

Interest only mortgages can also be a useful tool for someone who relies heavily on uneven income streams, such as being paid on commission or via bonuses. 

They don't have to worry about monthly payments and can instead pay off larger chunks when they are able.  

Most interest-only mortgages allow borrowers to make fee-free overpayments each year without incurring early repayment charges.

This means a sensible borrower can still reduce the debt over time with one-off payments.

Overpayments are typically restricted to 10 per cent of the mortgage amount each year, but can sometimes be more.

Andrew Montlake, chief executive of mortgage broker Coreco welcomed the new interest-only options. 

He said: 'Opening interest only to first-time buyers, while maintaining clear income thresholds of £75,000 sole or £100,000 joint, and keeping the proposition exclusively available via mortgage brokers, means customers will access the professional advice that is crucial, especially in the initial stages of their home-buying journey,' said Montlake.

'These are thoughtful, positive changes that support brokers and broaden choice for borrowers in a responsible way.'