Earlier this week, Gen H came out with a part and part mortgage with a maximum loan to value (LTV) of 95%. The buyer can also take up to 80% of the mortgage on an interest-only basis.
The firm said this deal was aimed at renters with a small deposit who cannot currently afford a standard capital repayment mortgage for their desired property.
Figures from UK Finance show there were around 10,000 part and part mortgages in 2024, making up 1.07% of total residential mortgages, barring product transfers. This proportion has varied over the past few years, hitting a high of 14,000 in 2022.
However, brokers said demand for this product could grow but that it was key for risks and repayment vehicle options to be communicated to buyers.
| Year | Number of part and part mortgages | Percentage of total residential mortgages |
| 2020 | 12,000 | 1.26% |
| 2021 | 15,000 | 1.29% |
| 2022 | 14,000 | 1.26% |
| 2023 | 11,000 | 1.23% |
| 2024 | 10,000 | 1.07% |
Source: UK Finance
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Nicholas Mendes, mortgage technical manager and head of marketing at John Charcol, said the higher LTV of 95% and permittance of up to 80% LTV being interest-only, along with the lower minimum income of £50,000, made the offering stand out.
He said: “The big advantage is flexibility, because borrowers who narrowly miss full repayment affordability can dial in an interest-only slice to bring the monthly cost within reach while still owning 100% from day one and retaining the ability to overpay.
“The trade-off is that any interest-only balance must still be cleared at the end of the term, so borrowers need a credible plan via overpayments, future income, or equity growth. Costs should also be assessed on a true cost basis rather than just the headline rate, including fees and any early repayment charges.”
Mendes said the risk with the product lies in “using the interest-only element purely to stretch affordability without a realistic repayment strategy”.
“With sound advice, sensible loan sizing, and regular reviews, a part and part structure can be a practical way to bridge today’s affordability gap while reducing at least some of the capital from day one. The key is making sure borrowers understand that the interest-only portion does not disappear and that a plan is in place to pay it down over time,” he added.
Mendes said the expected “strong interest” will be from prospective first-time buyers who are paying high rents yet fall just short on standard repayment affordability.
“For this group, a part and part set-up can be the difference between continuing to rent and being able to buy now, especially at higher LTVs. Uptake will ultimately depend on where pricing lands versus other 95% LTV options and on broker confidence in recommending the structure for the right customers,” he said.
He noted that this kind of product was “more likely to support transactions than to push prices materially higher”.
“It primarily helps buyers who are already in the market but currently miss out on affordability, rather than creating a wave of brand-new demand. If adopted widely, it should improve liquidity at the first-time buyer end of the market, but it is unlikely on its own to drive a significant house price acceleration,” Mendes said.
Part and part mortgage criteria key
Chris Sykes, director and property finance specialist at MSP Financial Services, agreed that Gen H’s part and part proposition was “unique” among lenders, as many did not go over 85% LTV.
He noted that while Gen H said it would go up to 80% LTV for the interest-only segment, in reality, the number of deals that would need that limit would be “incredibly low”.
“This is because you need an evidencable repayment vehicle to get up to these levels and most people will not have that if needing these sorts of loan to values in the first place,” Sykes said.
He added that it was important to keep in mind that Gen H’s criteria said it could accept the sale of mortgage property up to 60% LTV as a repayment vehicle for the interest-only segment, and this is a common repayment option.
“The criteria also said that a minimum remaining equity of £300,000 is required for properties within Greater London, and £200,000 for properties located outside this area.
“The reason to go part and part or interest-only is obviously cash flow, so some people use it when they are in industries where their income is varied; for instance, high bonuses used to pay down the mortgage in annual overpayments.
“Some people know they will receive a lot of inheritance so use interest only until that comes through, a more dangerous method but one adopted by many, with the backup often being sale and downsize. Some people do use things like ad hoc monthly payments as a repayment vehicle, which only certain lenders allow, as well as things like pension lump sums, other properties or other assets they own,” he said.
Sykes said borrowers are “generally understanding now that they are very much responsible for any interest-only debt they take and… [they] are now not linked endowments that are not performing”.
“They aren’t burying their heads in the sand so much – like many people that were relying on endowments openly admit they did,” he noted.
Buyers need to understand risks of part and part with overpayments an option
Jinesh Vohra, CEO of the free mortgage overpayment app Sprive, said part and part mortgages can make homeownership more affordable each month, but buyers “need to understand the risks”.
“As a chunk of the loan is interest-only, you’re not actually reducing that debt – meaning you could face a large balance still to repay at the end of the term. That’s why overpaying is crucial. Even small, regular overpayments can chip away at what you owe, save thousands in interest, and help you avoid carrying this debt well into later life.
“The challenge, of course, is that many people choose this type of mortgage precisely because money is tight,” he said.
Vohra said Sprive made mortgage overpayments easier to overpay without needing spare cash, as you earnt cashback on your everyday shopping at retailers like Tesco, Sainsbury’s and M&S, and can pay it straight off your mortgage in one tap.
He said users can earn more than £260 in cashback, which could save £9,700 in interest over the term of the average mortgage.
