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Based on your yearly income,
you may be able to borrow
Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.
Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.
Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.
How Do Part Repayment and Part Interest-Only Mortgages Work?
One way to combine the benefits of both a repayment and an interest-only mortgage is to consider a part and part mortgage - which blends both types of borrowing.
Part and part mortgages are flexible, and support homebuyers in multiple scenarios in controlling their budgets, while having a secure way to repay the mortgage balance.
If you'd like to compare the costs of a part and part mortgage against other options, contact the Revolution Brokers team on 0330 304 3040 or email us at [email protected].
What is a Part and Part Mortgage?
This type of lending is a hybrid of an interest-only mortgage, and a traditional capital repayment loan.
Over time, you pay only the interest owing, plus a proportion of the capital. At the end of the term, you still have some of the debt outstanding, but of a lower value than with a solely interest-only mortgage.
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Can I Use a Part and Part Mortgage Calculator to Compare Rates?
You can indeed - but it's worth being mindful that calculators are only ever indicative, and cannot help you understand whether you would be eligible to apply.
This blended mortgage product is bespoke to your circumstances, so it is essential to consult an experienced broker who can help structure the right deal.
How Can I Compare the Costs of a Part and Part Mortgage Against Other Products?
It is essential to understand the respective costs and benefits of different mortgage products before taking out lending secured against your property.
Part and part mortgages are tailored to the applicant, and so there aren't typical rates or costs, since these will vary between lenders.
The best option is to give us a call and discuss your requirements. Most lenders will need to know a few key pieces of information to give an indicative quote:
- The value of the property, and how much you wish to borrow.
- How you will repay the residual capital balance at the end of the term.
- Your circumstances, such as income and other debts.
What are the Benefits to Part and Part Mortgages?
This mortgage product is suited to borrowers who have a repayment vehicle, but perhaps not sufficient to repay the full value of the borrowing, or who want to manage their monthly payments.
What are the Eligibility Criteria for Part and Part Mortgages?
As a non-standard product, each lender will have their own criteria to decide whether they can offer you a part interest-only, and part repayment mortgages.
Lenders will consider:
- The Loan to Value ratio (i.e. loan value against the property value).
- Your repayment strategy.
- Credit history and rating.
- Income and affordability criteria.
- Your age, and the type of property.
- What the funds are intended for in a remortgage application.
What Repayment Vehicle is Suitable for a Part Interest-Only, Part Repayment Mortgage?
Your repayment vehicle is your plan to repay the outstanding debt at the end of the term. Lenders will need to know the plan in advance, as well as looking at valuations and projected growth.
Some of the most common repayment vehicles include:
- Selling a property - usually another portfolio property.
- Redeeming investments such as bonds, stock or shares.
- Using a pension fund lump-sum withdrawals.
- Endowment policies - although less common.
Does my Part and Part Mortgage Repayment Strategy Impact How much I Can Borrow?
It does - a lender needs to check the value of your repayment strategy before offering you lending. For example, if you are planning to use cash savings, the provider will assess your monthly savings value, and calculate the anticipated value at the end of the term.
An an example - you apply for a mortgage of £100,000:
- You have cash savings of £30,000 - a lender offers a maximum £30,000 interest-only mortgage element with the £70,000 on a repayment basis.
- You own a second property, worth £200,000, and have a £50,000 mortgage balance owing. The lender might offer up to £150,000 interest only, if considering 100% of the equity as the repayment vehicle (many lenders will cap the percentage of equity they use as the repayment plan).
What Can I Do to Prove my Repayment Vehicle is Suitable for a Part and Part Mortgage?
The below is an indicative list of documentation and information a lender will need to assess the viability of your repayment vehicle:
Lender Proof Requirements
Portfolio property sale
Ownership deed copies
Mortgage statement demonstrating amount secured against the property
Sale of investment stocks or shares.
Share ownership certificate copy
Valuation statement from an accredited professional.
Use of pension funds, investment bonds, ISA funds or an endowment policy.
Account statement with projections to the end of the mortgage term.
Is There a Maximum Mortgage Limit on Part Interest-Only, Part Repayment Mortgages?
There isn't usually a fixed maximum, since a lender will rely on affordability calculations and an assessment of your repayment strategy, as well as the property value, to come to a decision.
It can be complex to assess different lenders to find somebody who will offer the lending you need; so using an expert broker can be vital to streamlining the process.
Lenders will consider the following criteria when setting a maximum mortgage value:
- Loan to Value ratio - many lenders offer up to 85% LTV, so you will need at least a 15% deposit. If you have a higher deposit, you will be able to choose between more lenders, and usually secure more competitive rates.
- Affordability - lenders need to look at how much you earn, and other debts of outgoings. Many providers will offer up to four, or 4.5 times your annual income, although specialists will lend as high as six times your salary in specific circumstances.
- Employment status - PAYE employment is usually the easiest option, but a lender may ask for a copy of your contract as well as requiring one year of employment history in the same job. For self-employed applicants and contractors, lenders will often ask for at least one year worth of accounts or self-employed tax returns.
While all of these factors will dictate the maximum you can borrow on a part and part mortgage, there are often caps on minimum and maximum mortgage sizes, specific to the lender.
Maximums can go up to £500,000, £750,000 or even as high as £2,500,000 depending on the provider.
Can I Get a Part Interest-Only and Part Repayment Mortgage if I Have Bad Credit?
Even in severe credit situations, niche lenders can offer flexible solutions.
Bad credit lenders will need to assess the nature of the issues, and when they occurred. In some cases you will be able to secure a part and part mortgage, but only if you have a higher deposit, and the rates might be less competitive.
Can I Apply for a Part and Part Mortgage at Any Age?
Some lenders will have a maximum applicant age of 70 - although some set a cap much higher, or have no maximum at all.
Later life mortgages can be a specialist product depending on how long you wish to borrow for, and therefore your age at the end of the term.
Can I Switch a Part Interest-Only and Part Repayment Mortgage to a Capital Repayment Mortgage?
You can, yes - and if your circumstances change, or the value of your repayment vehicle falls through, it can be beneficial to look at remortgaging options as soon as possible:
- Remortgage from part and part to interest-only. If your repayment vehicle holds sufficient value, you can change a part and part mortgage to a full interest-only loan. Most lenders will need a minimum equity, typically around £100,000 - £150,000.
- Remortgage from part and part to full repayment. A more common scenario is to switch from a partially interest-only mortgage to full capital repayment. Lenders will need to check you can afford the increased monthly costs.
What Happens if I Cannot Repay the Balance of my Part and Part Mortgage?
The most significant risk is that your repayment vehicle drops in value, and you are left without a way to repay the remaining debt at the end of the term.
There are several options available:
- Remortgaging with a different provider at a lower monthly cost to five you more time to accumulate the funds.
- Remortgage to a capital repayment mortgage to pay back the balance gradually.
- Apply for a mortgage extension.
If you are over 55, another option is an equity release product, which depends on the value of the property.
Lifetime mortgages are one way to remortgage from a part and part mortgage, with the payments continuing until you pass away, or go into care, and the property sold at that point to repay the remaining debt.
Can I Get a Part Interest-Only, Part Repayment Mortgage on an Investment Purchase?
You can - interest-only mortgages are far more common in the buy to let property market.
Investors can choose a blended mortgage option, which means they can continue to manage their monthly costs with a lower payment than on a full repayment mortgage, but stand to release more equity at the end of the term with a portfolio property sale, with a lower capital balance left to pay.
Lenders will need to run through affordability assessments, and consider the anticipated rental income to evaluate the application.
Expert Advice with Part and Part Mortgages
Mortgages can be complicated and difficult to compare, and it is vital to seek independent, professional advice before committing to a debt secured against your home.
The mortgage brokers team looks at your circumstances, property, and advises on the right lenders who can support your application and offer the funding you need.
Contact us on 0330 304 3040 or drop an email to [email protected] to arrange a time to chat with one of our interest-only mortgage experts.
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As specialist mortgage brokers for a huge variety of applicants, the whole-of-market consultants at Revolution provide access to an exceptional range of lenders, products and mortgage deals. That means you get the advantage of professional negotiation and broker-exclusives through an established lending network to ensure we always find you the most competitive mortgage available.
The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.
We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.