Part & Part Mortgage

There are lots of lenders that provide part and part mortgages, both high street and specialist lenders will have part and part options available for their customers.

Part and part mortgages will be available for:

• Employed and self-employed.
• Bad credit customers.
• Mortgages for the over 50s.
• Remortgages.
• Capital raising.
• Anything else.

A mortgage broker will be able to provide mortgage advice on the best part and part mortgage deal that suits your personal situation.  Part and part mortgages are not for everyone. They’re classed as higher risk lending because at the end of the term your loan will not be fully repaid.

At the end of a part and part mortgage term, the interest-only element will need to be repaid in full to your lender.  They’ll start writing to you ahead of time to remind you and to give you plenty of time to act.

Your options include:

• A remortgage on to full repayment providing the funds to repay the lender, you’ll need qualify on affordability and credit checks.
• Repay the balance using your savings, investments, pension lump sum etc.
• Sell the property and downsize to repay the funds.
• If you are over the age of 55, there may be retirement mortgage products or equity release deals available to you such as a lifetime mortgage.

The best thing to do is to keep speaking with your existing lender to let them know how you’re going to repay the funds, if the property is to be sold, they may allow an extension of the product to give the sale time to go through.

The pros of a part and part mortgage are:

• Keeps your mortgage payments at a lower level for the term of the mortgage due to some of the loan being on an interest-only basis.
• They can provide a good level of flexibility with overpayments.
• They suit customers looking to downsize in the future or for those with a big inheritance due.
• They’re a good product for someone that is looking for full interest-only however can’t borrow enough on this basis due to the loan to value.

The cons of a part and part mortgage are:

• The loan will not be fully repaid at the end of the term.
• A repayment vehicle will need to be in place to qualify.
• You’ll pay more interest overall then with a regular repayment mortgage.
• You don’t have the peace of mind and security that your mortgage will be full repaid at the end of the term.

Part interest-only and part repayment mortgage mean that a percentage of your property has a mortgage where the capital and interest are repaid together, and the remainder is on an interest-only basis.

With the interest-only basis the capital is not being paid back, therefore, at the end of the term you’ll need to repay this as a lump sum.

If you have a historic part and part mortgage in place with no repayment vehicle, you should consider looking at a remortgage to full repayment if this is affordable to you for peace of mind.

If you are over the age of 60, there will also be retirement mortgage options available to you for consideration in order to ensure you stay in your property.