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Part and part mortgages

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 6, 2023

Part interest and part repayment mortgages – Also known as art and part mortgages – explained

People usually choose between a capital repayment mortgage or an interest-only mortgage regarding mortgage repayments. There are more options.

A hybrid of both capital repayment and interest-only mortgages, part-interest mortgage term, and part-repayment mortgage term is effectively a combination.

This comprehensive guide explains what a part mortgage is, how it works, who qualifies, and how you can explore it as an alternative to traditional standalone repayment options.

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What exactly are part and part mortgages?

This mortgage allows you to repay a fraction of your mortgage through monthly payments instead of all interest-only. This allows for a lower balance to be paid at the end.

It is the best of both worlds as you can pay part interest and part repayment from your total mortgage balance.

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These mortgages offer many benefits

A unique, flexible solution to your repayment needs, half-interest and half-payment mortgages provide multiple benefits. These benefits include:

  • Ability to make lower monthly payments than those in capital repayment models.
  • Reduced lump sum payable at the close of an interest-only loan
  • There is less interest to pay on an interest-only mortgage because it decreases over time.
  • You have the opportunity to influence the ratio of the two types of mortgages.

There are two drawbacks to an interest-only mortgage: you still need a way to pay off the lump sum, and if your repayment mechanism fails, you will need another one to repay the remaining debt.

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Who is eligible for this type of mortgage?

Part and partial mortgages have their specific requirements. Each lender will still be able to work according to their criteria, but they will all be looking at the following:

  • Your repayment plan: The lender will ask you how you plan on paying off the interest-only portion of the remaining term balance.
  • The property type and its value. Interest-only arrangements are considered riskier. A lender may not lend to you if the property is nonstandard. However, specialist lenders are available that can be accessed through a broker.
  • The deposit: Lenders are more comfortable with a higher deposit. Most lenders accept LTV (maximum loan-to-value) in part-and-part situations. Anything lower will not work in your favour.

Like any mortgage application, the core of the assessment is whether you can repay the amount you request. You must provide information about your income, outgoings, credit history, and debts.

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How to get a mortgage that is both part-and-part

These steps will help you get started if you feel this is the model you want to explore and possibly apply for.

Step 1: Calculate a partial repayment, part interest-only mortgage calculator.

This will allow you to decide what amount of interest-only repayment is best for you. This will give you an idea of what your monthly payment could look like.

Although this would be completed with the lender, it is a good idea to know what your monthly repayments could look like before you apply.

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Step 2: Think about your repayment plan.

It is necessary to provide evidence that you will pay the remaining interest-only portion. Lenders like Halifax make it easy to see what evidence they will accept.

Step 3: Speak to an advisor

Part and partial mortgage brokers can help you determine your repayment options, assess your financial situation, and recommend a lender most likely to approve you and offer you the best rates and terms.

Step 4: Apply for a mortgage.

Work with your broker to complete and submit your application. Do this below now:

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Who can offer part and part mortgages?

Part and partial mortgages have a slightly higher risk than traditional mortgages, but there is still a market. These types of home loans can be obtained with some high-street lenders, including:

  • Skipton Building Society
  • Halifax
  • Barclays
  • Leeds Building Society

A quick Google search will not bring up specialist part and partial mortgage lenders. A broker can help you negotiate better rates and offer more flexibility than traditional lenders.

No matter which lender you choose, approaching them directly could result in rejection. A broker can quickly find you the best deal and allow an expert to review the terms, rates, ratios, and terms.

We can help you find the best mortgage deal for you in just a few hours below:

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Advantages of Part and Part Mortgages

Combining the two types can help reduce monthly payments in the short term.

Contrary to a single interest mortgage, the combination mortgage with part repayment ensures that there is some capital payment. The lump sum payment will not be as large as the principal amount if the term ends.

A part and part mortgages are less expensive than an interest-only mortgage because the interest is paid over a shorter term. This is because the capital loan repayments reduce the interest.

Part and partial mortgage lenders can be flexible, allowing borrowers to choose the ratio between the mortgage types.

However, this amount will depend on the borrower’s circumstances and the available repayment vehicle.

Advantages and disadvantages of Part and Part Mortgages

Combining two types of mortgages has no disadvantages. However, it is important to seek specific financial advice. This will ensure that you completely understand each part and all financial considerations.

A plan, for example, would be needed to repay the capital amount left at the close of an interest-only mortgage. This is regardless of how large the portion or combination. Otherwise, financial pressures could be postponed until the mortgage term ends.

A like-for-like comparison will show that a part-and-part mortgage will have higher interest rates than a repayment mortgage.

Therefore, it is essential to fully explore why a borrower would choose to enter a part or part mortgage and the ratio between the different types of mortgages.

Match you with a specialist in part-and-part mortgages

The hybrid model requires you to have a solid repayment plan and perform more calculations.

A broker will ensure that you apply to the right lender for the best possible part and partial mortgage.

Our brokers have access to all the lending markets and can compare part and partial mortgages to determine the best rates when you apply.

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Can I change from a part-and-half mortgage to an interest-only or capital mortgage midterm?

Yes. However, to switch to interest-only, the lender will need all evidence to prove that you can pay off the more significant amount. A lender will need to see proof that you can afford the monthly payments if you want capital repayment.

Is there part and part that are available to buy-to-let

Yes, this repayment option is available if you are looking to rent a property.

Talk to a broker to find a specialist mortgage lender here today.

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