Questions about part and part mortgage

pieroabcd

Hi,
can someone explain what are the requirements and the implications of a part and part mortgage?
The idea looks very interesting because it lowers the monthly committment. I'm used to save as much money as I can, I've done it all life long.
No fuss expenses and very frugal life. At the moment i could apply for a 75%LTV. The broker that I talked to told me that I could get 60% as IO, the rest as repayment.

1) I've read that it's not so easy to get the interest only part. One site mentions

you will usually also have to make parallel payments into a repayment vehicle – such as an ISA or other investment plan – which will provide you with the lump sum needed to pay off the total outstanding balance at the end of the mortgage term

What does it mean in practice? Would they propose me to buy some other financial product to finance the IO part or could I do without it and get the IO part proving that my income is sufficient and that I'm reliable saver?

2) Still regarding the IO part, when it's time to repay the lump sum will I have to pay only the IO sum that I borrowed (plus the interests repaid monthly, of course) or would that lump sum increase in value (and in debt) over time? If I'm not mistaken only equity loan change in value over time (depending on the value of the house, like in HTB) while the lump sum of IO mortgages should remain the same until the end of the mortgage term, correct? 
If I borrow 100k for the IO part will I still owe only 100k at the end of the mortgage?
Please, confirm or correct because I want to be absolutely certain thet I won't choose the wrong solution.

3) What are the implications of early repayments with part and part mortgages? Is there any catch? Is it more convenient to repay early only the repayment part (assuming that it's allowed) to minimize the interests paid, or does it always end up being more or less the same?

Thanks.

[Deleted User]

You would have to prove you have a repayment vehicle to repay the IO that matches what a lender will accept

'i have a large income and promise to save enough to repay it' used to be acceptable 15 years ago but aince the vast majority of those people forgot to do any saving then you actually need something you can prove will likely cover the IO amount

Pension, investments, cash savings, other mortgage free properties are all examples of this.  Not all are acceptable to all lenders 

amnblog

What is the benefit to you here? If no clear benefit go for full capital repayment.

pieroabcd

The benefit is having a lower monthly installment.

[Deleted User]

with the massive disadvantage of not bring certain of owning your home at the end of the term and having no plan to repay the debt

pieroabcd

Deleted_User said:

with the massive disadvantage of not bring certain of owning your home at the end of the term and having no plan to repay the debt

If I didn't repay the debt with a repayment mortgage I wouldn't own the house, either.
I mean, assuming that I repayed the debt what's the difference?
Or am I missing something?

grumiofoundation

pieroabcd said:

Deleted_User said:

with the massive disadvantage of not bring certain of owning your home at the end of the term and having no plan to repay the debt

If I didn't repay the debt with a repayment mortgage I wouldn't own the house, either.
I mean, assuming that I repayed the debt what's the difference?
Or am I missing something?

But the difference is with a repayment mortgage the only way you won’t repay the debt is if you miss payments and go into arrears.

With interest only (portion) you have to save the equivalent repayment portion yourself and have more discipline. Otherwise you reach the end of the term and don’t have enough to repay. 

Setting aside the discipline/commitment issue mentioned above the main drawback of interest only is that you will pay more interest. 

Now if your repayment plan is matching/beating the mortgage interest this isn’t an issue.

pieroabcd

ah well, this makes perfect sense.

[Deleted User]

pieroabcd said:

Deleted_User said:

with the massive disadvantage of not bring certain of owning your home at the end of the term and having no plan to repay the debt

If I didn't repay the debt with a repayment mortgage I wouldn't own the house, either.
I mean, assuming that I repayed the debt what's the difference?
Or am I missing something?

if you have a repayment mortgage then the lender will realise within 1 month that you are behind on your payments.   If you have an interest only mortgage and are saving separately then they might not realise for 10 or 20 years that you havent done anything to repay it