🇬🇧 UK Mortgage Calculator (2025)

Repayment Mortgages are the most common and recommended type, where monthly payments cover both interest and capital. A £200,000 mortgage at 5% over 25 years costs £1,169 monthly (£350,700 total). Interest-Only Mortgages have lower monthly payments (£833 for the same loan) but require a repayment vehicle to clear the £200,000 at term end. These are increasingly difficult to obtain, requiring 40%+ deposits. Fixed-Rate Mortgages lock your interest rate for 2-5 years, providing payment certainty - approximately 90% of new UK mortgages are fixed rate. Rates are higher than variable products but protect against rate rises, with Early Repayment Charges (ERCs) of 2-5% during the fixed period. Variable-Rate Mortgages fluctuate with the lender's SVR or Bank of England base rate, offering lower initial rates but uncertain future payments. These include tracker mortgages (fixed margin above base rate) and discount mortgages (discount off SVR), suitable for those expecting rates to fall or seeking flexibility without ERCs.

The Loan-to-Value (LTV) ratio determines your mortgage rate - lower LTV means significantly lower rates. First-time buyers typically need 5-15% deposits, though 10% is the practical minimum for reasonable rates. LTV bands dramatically affect costs: 60% LTV (40% deposit) might be 4.5%, 75% LTV (25% deposit) 4.8%, 85% LTV (15% deposit) 5.2%, 95% LTV (5% deposit) 5.8%. On a £300,000 property, the difference between a 10% and 25% deposit equals £60 monthly or £21,600 over 30 years. Government schemes help first-time buyers: the Lifetime ISA provides a 25% bonus on savings up to £4,000 annually for deposits, Shared Ownership allows buying 25-75% of a property to reduce required deposits, and the First Homes scheme offers 30-50% discounts on new-build properties for local first-time buyers and key workers. Consider that larger deposits not only reduce monthly payments but also significantly improve your chances of mortgage approval and access to better interest rates.

UK lenders typically allow borrowing 4-4.5× annual household income, with some offering up to 5-5.5× for high earners or professionals. A £50,000 salary qualifies for £200,000-225,000; a £75,000 salary qualifies for £300,000-337,500. Financial Conduct Authority regulations require lenders to stress-test affordability at rates 3% above the initial rate, ensuring you can afford payments if rates rise. Credit scores significantly impact approval and rates: excellent credit (750+) accesses the best rates, while poor credit (<650) limits options and increases rates by 1-2%. Lenders review payment history, existing debts, credit utilization, and recent credit applications. Improve your score before applying by registering on the electoral roll, paying all bills on time, reducing credit card balances below 30% of limits, and correcting any credit report errors. Even a 6-month effort to improve your credit score can save thousands of pounds over your mortgage term by qualifying you for better rates.

Stamp Duty Land Tax (SDLT) is a significant upfront cost. First-time buyers pay no SDLT on properties up to £425,000, then 5% on the portion £425,001-£625,000. Existing homeowners pay graduated rates from 0% (up to £250,000) to 12% (over £1.5m). A £350,000 property costs a first-time buyer £0 in SDLT but an existing owner £5,000. Arrangement fees range from £0-2,000 for mortgage processing and can be added to your mortgage amount (though this increases total interest paid). Fee-free mortgages often have slightly higher rates - calculate which option is cheaper over the full term. Valuation and surveys cost £200-500 for basic valuations, £400-900 for homebuyer reports, and £600-1,500 for full structural surveys. Surveys are highly recommended for older properties as they frequently identify issues that save thousands in unexpected repairs. Solicitor fees typically total £1,200-2,000 including disbursements (searches, Land Registry fees). Always compare quotes from multiple conveyancing solicitors to find competitive rates.

Most UK mortgages allow 10% annual overpayments without penalties, and this strategy can save substantial amounts. A £200,000 mortgage at 5% over 25 years costs £150,700 in total interest. Adding just £100 monthly in overpayments saves £31,400 in interest and clears the mortgage 5.5 years early. Increasing to £200 monthly saves £52,800 and finishes 9 years early. Every £1 overpaid saves approximately £1.50-2 in interest over 25 years due to compound interest. Timing matters significantly - early overpayments provide maximum benefit. A £5,000 lump sum overpayment in year 1 saves £8,200 in interest, while the same payment in year 15 saves only £2,900. Therefore, prioritize mortgage overpayments over savings accounts if your mortgage rate exceeds your savings interest rate (which is usually the case). Even small, consistent overpayments can dramatically reduce both the total interest paid and the time it takes to own your home outright.

Initial fixed-rate periods typically last 2-5 years, after which your mortgage reverts to the lender's Standard Variable Rate (SVR), typically 7-8% - significantly higher than new deal rates. You should remortgage to a new lender or take a product transfer with your existing lender 3-6 months before your fixed period ends. Remortgaging can save £2,000-5,000 annually compared to staying on the SVR. However, consider arrangement fees, valuation costs, any early repayment charges, and solicitor fees (though many remortgage deals cover legal costs). Review your mortgage annually even during a fixed term. If your property value has increased and your equity has improved (better LTV), you might access better rates that justify paying early exit fees. For example, if rates have dropped 1.5% and you have £250,000 outstanding, annual savings of £3,750 might justify a £2,500 ERC. Shorter mortgage terms mean higher monthly payments but dramatically reduced interest: a £200,000 mortgage at 5% costs £84,760 in interest over 15 years versus £150,700 over 25 years - a £66,000 saving despite only £413 higher monthly payments.