A London couple working in hospitality used a part repayment, part interest-only mortgage to create greater flexibility in their monthly budget despite being able to borrow more on a conventional repayment basis.
Residential lender Gen H has published a case study demonstrating how a part repayment, part interest-only mortgage can help first-time buyers with fluctuating incomes manage their monthly finances without stretching their borrowing capacity.
The case involved Jacob, 40, and Leah, 35, who moved to the UK several years ago and recently bought their first home in London. Both work in hospitality, where overtime forms a significant part of their earnings. Jacob earns between £50,000 and £60,000 a year including overtime, while Leah earns between £30,000 and £40,000.
The couple purchased a flat using a mortgage at 90% loan-to-value. A quarter of the borrowing was arranged on an interest-only basis over a 34-year term at a rate of 5.79%, with the interest-only element due to be repaid through the eventual sale of the property.
Although they qualified to borrow more than £425,000 on a full capital repayment mortgage over 40 years, they opted to borrow only what they needed and structure part of the loan on an interest-only basis to reduce their monthly repayments and provide a financial cushion if their income varies.
Gen H said the case reflects a growing willingness among younger buyers to consider interest-only borrowing as part of a broader financial planning strategy rather than solely as a way of increasing borrowing capacity.
The lender noted that while 62% of capital repayment mortgages completed in 2025 were taken out by buyers under 40, only 11% of interest-only mortgages were arranged by borrowers in the same age group.
By keeping their borrowing below the maximum available and combining repayment and interest-only borrowing, the couple have greater flexibility if overtime reduces or they choose to prioritise other financial commitments. They also retain the option to make overpayments to reduce the outstanding capital balance.
Sara Palmer (pictured), sales and distribution director at Gen H, said: “We’re seeing more first-time buyers arrive in the UK with good, stable jobs that just don’t look like a typical nine-to-five salary on paper.
“Jacob and Leah’s case is a reminder that responsible lending and great advice isn’t only about how much someone can borrow, it’s about giving people a mortgage that still feels manageable if a quiet month at work, or cutting back on hours, means a smaller pay cheque.”
