Considering applying for part Repayment part Interest Only mortgage

2cojones

I am struggling to get a mortgage based on contract rate (I'm a Contractor), despite two AIPs from Metro Bank and Halifax which both led to the mortgage application being turned down by their underwriters (I have one default on my credit file from July 2015, otherwise good)
I now have a new broker who has found a mortgage product with Kent Reliance. Based on my contract rate I can borrow £246k which is what I need. They have given me an AIP.


However … as the interest rate is 3.79% fixed for 5 years (15 year term) I could not stretch to an £1800 monthly payment, so the broker has suggested a split Repayment / Interest Only mortgage. So it's £200k on a Repayment basis and £46k on an Interest Only basis which brings it down to approx. £1600 per month, my max budget.


My question is - is this a common way of borrowing ? Are there any glaring disadvantages ? I can live with not paying any capital off a fifth of the mortgage for 5 years, and I can always make overpayments if and when possible to lessen the impact. Also in 5 years I will finish paying £709 per month to my ex (divorce settlement). Any thoughts / advise please.

Thrugelmir

Why only a 15 year term?

2cojones

The broker said that is the only option with this mortgage product. A 20 year term would be ideal …. however I am 54 so may be hard to find.