When getting a mortgage, one possibility is choosing between a repayment or interest-only structure. However, there is a hybrid option offering the best of both worlds. Here, we’ll explain what a part and part mortgage is, how they work, how to calculate repayments, and where to find the best part and part mortgages.
What is a part and part mortgage?
It’s a type of home loan where one portion of the borrowing is repaid through regular capital repayments, and the remaining balance is structured on an interest-only basis.
This means that one part of the mortgage balance gradually reduces over time through monthly repayments, while the interest-only portion remains outstanding until the end of the mortgage term.
Part-and-part mortgages are sometimes used by borrowers who want to reduce their monthly payments compared with a full repayment mortgage while still gradually paying down some of the debt.
How they work
With a part-and-part mortgage, the loan is divided into two segments:
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Repayment portion: The first portion works like a standard repayment mortgage. Each month, your payments cover both interest and a portion of the principal, gradually reducing the outstanding balance.
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Interest-only portion: The second portion is structured as interest-only. So, monthly payments only cover the interest charged on that part of the loan, meaning the original borrowed sum must be repaid in full at the end of the mortgage term.
Mortgage example
If, for example, you borrowed £300,000 using a part-and-part mortgage, a lender might structure the loan so that:
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£200,000 is on a repayment basis
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£100,000 is on an interest-only basis
During the mortgage term, you would gradually repay the £200,000 portion, while the £100,000 balance remains outstanding until the end of the term.
Because lenders take on additional risk with interest-only borrowing, they typically require you to have a clear exit strategy or repayment plan for the interest-only portion of your loan - this could be savings, investments, or the sale of another property.
Who do these mortgages suit?
Part-and-part mortgages can be particularly useful for:
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High net worth (HNW) borrowers: If you’re asset-rich or have a high net worth - perhaps owning illiquid investments, equity or multiple properties - a part-and-part mortgage can allow you to reduce your monthly payments, freeing up cash flow to spend or invest elsewhere.
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Interest-only remortagers: If you happen to be on an interest-only mortgage from the past, remortgaging onto a part-and-part mortgage can be a helpful stepping stone to make your way back towards a full repayment mortgage without the shock of shouldering a sharp increase in your monthly payments.
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Endowment shortfall borrowers: If you took out an endowment mortgage in the 1980s or 1990s during the height of their popularity, transitioning to a part-and-part mortgage could allow you to cover any shortfall and convert a portion of your mortgage to capital repayment.
However, whether a part-and-part mortgage is the right option for you depends on your specific circumstances, which is why professional advice can be crucial.
Eligibility criteria
The eligibility criteria for part-and-part mortgages vary between lenders, but they generally result in a combination of requirements for both repayment and interest-only mortgages:
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Your income: You’ll need to prove you have a sufficient income to borrow the amount you need and afford the monthly payments. You might also need to meet any minimum income thresholds required for interest-only borrowing.
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Repayment strategy: You’ll need an acceptable repayment vehicle for the interest-only portion, and each lender will have rules around what they can accept.
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Deposit and LTV: Because of the additional perceived risk, some lenders may have stricter requirements related to the size of your deposit and loan-to-value (LTV) limits, so you may need to factor this in.
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Interest-only limits: Many lenders restrict the proportion of the mortgage that can be placed on interest-only, often limiting it to a certain percentage of your total borrowing.
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Credit profile: Lenders will look at your credit profile to assess whether you can get a part-and-part mortgage. If you have bad credit, a mortgage may still be possible, but you’ll likely need to approach a specialist bad credit lender.
Because lender criteria can vary significantly, working with a mortgage broker can help identify lenders that support a part-and-part structure that also suits your circumstances.
Part and part mortgage repayment calculator
If you want to get an idea of what your payments will look like when your loan is split to combine both repayment and interest-only borrowing, you can use our part-and-part mortgage calculator below.
Based on your information, it will estimate your monthly payments and show how much of the loan will remain outstanding at the end of the mortgage term. All you need to do is enter the total amount you’re borrowing, how it’s split between repayment and interest-only, along with the interest rate and mortgage term:
How to get a part-and-part mortgage
Getting a part-and-part mortgage usually follows a similar process to other types of mortgage applications. However, there are some key differences due to the inclusion of both a repayment and an interest-only component:
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Speak with a broker: Because these mortgages are less common and lenders' approaches can vary, the best strategy typically involves speaking with an experienced broker to find lenders and, most importantly, secure the most competitive deal.
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Assess your options: Your broker can help you figure out how much you can borrow based on your income, deposit size, credit profile, and other financial commitments. They’ll then help you choose a lender that supports part-and-part mortgage structures and meets your individual circumstances.
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Apply with a lender: Once you’ve selected a lender, the full application process typically involves affordability checks, credit assessments, evaluation of your repayment strategy, and a property valuation before a formal mortgage offer is issued.
If you’d like to compare the latest part-and-part mortgage deals or have a chat with a broker who specialises in part-and-part mortgages, you can get started below.
Begin your mortgage journey
Who offers part and part mortgages?
Here are a few examples of popular high street banks and mainstream lenders that may consider applications for a part repayment and part interest-only mortgage:
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NatWest: For NatWest, where there’s any element of interest-only in a mortgage, the maximum term is 35 years (or 30 years if the loan is over £500,000). It also has a specific list of acceptable repayment strategies (RPS).
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Nationwide: With a Nationwide part-and-part mortgage, the maximum LTV is 85% (of which up to 75% LTV can be interest-only). Apart from the LTV restrictions, these mortgages share the same features and eligibility criteria as other Nationwide interest-only mortgages (including repayment plan options).
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Halifax: If you split your mortgage between repayment and interest-only, the LTV limit is 75%. And for your repayment plan, it must be on a specific list and meet other requirements. For example, if you plan to use funds from a stocks and shares ISA, Halifax will only accept up to 80% of the latest valuation.
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HSBC: If any part of your mortgage with HSBC is interest-only, you need an annual income of at least £75,000, and the maximum term on offer with a HSBC part-and-part mortgage is 25 years (due to the interest-only component), with a 75% LTV limit for the loan.
Because each lender’s policy can change and part-and-part criteria can differ significantly, it’s worth comparing multiple providers to find the best deal.
Compare the best part-and-part mortgage deals and providers
Finding the best part-and-part mortgage deal with terms that suit your needs can be more complicated than arranging a standard repayment mortgage.
Working with a mortgage broker can simplify the process, as they can identify lenders offering the most competitive rates and those that support part-repayment and part-interest-only mortgages based on your specific circumstances.
Here’s why borrowers across the UK choose Money Helpdesk when comparing part-and-part mortgages:
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Access to experienced part-and-part mortgage advisors
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Support structuring part interest and part repayment arrangements
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Whole-of-market mortgage comparisons across leading lenders
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Free initial chat with no obligation to proceed further
If you’d like to compare part-and-part mortgage deals or discuss whether this structure could work for your situation, you can get started here.
FAQs
Yes, some lenders allow borrowers to make overpayments on part-and-part mortgages, although the rules can vary depending on your specific mortgage product. Certain lenders allow overpayments on the repayment portion, the interest-only portion, or both.