UK Mortgage Payment Calculator

Almost every UK mortgage is priced by loan-to-value. A smaller deposit does not only mean borrowing more - it means borrowing at a worse rate.

• Every step down in LTV usually improves the rate - the difference between 90% and 75% can be worth a meaningful fraction of a percent, which compounds across the whole term.
• Deposit size also determines product availability - the cheapest headline rates are generally reserved for the lowest LTVs.
• The deposit must be genuinely available and its source is checked. Borrowed deposits complicate applications.
• Larger deposits reduce the amount at risk - and make it far less likely you fall into negative equity if prices fall.

Note. Compare products at your actual LTV rather than the advertised representative rate, which is usually set at a low LTV that few applicants reach.

• Arrangement or product fees range from nothing to well over a thousand pounds, and are the main reason two mortgages with the same rate cost different amounts.
• Valuation fees are often free as an incentive, but not always.
• Booking and application fees may be charged separately and are often non-refundable if you withdraw.
• Cashback offers can offset fees but are usually repaid in full if you leave within an early period.
• Some low-rate products are fee-heavy by design - the rate is competitive because the cost has moved to the fixed charge.

The decisive question is whether the fee is added to the loan - if so, you pay interest on it for the whole term, which can erase the rate advantage entirely.

• The fixed rate is the default for good reason - it removes payment uncertainty for a defined period, which is valuable when budgets are tight.
• The cost is the exit. Fixed and tracker products carry an early repayment charge for the whole term.
• Standard variable rate mortgages are generally the dearest and are frequently the lender's default after a fixed term ends - actively reviewing at that point matters.
• Tracker products move with policy decisions and can fall as well as rise, but the borrower carries the full risk.
• The honeymoon period after a fix ends is when borrowers overpay most often without realising it.

1. Fixed, discount and tracker products usually carry an early repayment charge typically between one and five percent of the balance for the duration of the deal.
2. The charge applies to significant repayments, not ordinary scheduled payments.
3. Most lenders permit a penalty-free overpayment of around 10% of the original loan each year - check your specific terms, as the wording varies.
4. Exceeding that triggers the charge, which can be substantial on a large balance.
5. An open product allows repayment at any time but carries a higher rate throughout.
6. Leaving altogether to remortgage elsewhere also attracts the charge, which is why many wait until the term ends - an expensive habit if the rate gap is wide.

Note. Remortgaging near the end of a fixed term is standard practice. Doing it while an early repayment charge applies requires a break-even calculation covering the charge, new fees and the rate difference.

• Repayment (capital and interest) mortgages clear themselves by the end of the term. This is now the norm and the only type most new borrowers should consider.
• Interest-only requires a repayment vehicle - historically endowment policies, which failed to deliver for many borrowers. Self-certified interest-only lending is now tightly restricted.
• Affordability is assessed well above your actual rate - lenders test whether you could still pay if rates rose, using a stress margin rather than the product rate.
• Income multiples are capped, typically four to four and a half times income, with higher figures available in some circumstances.
• Living costs and existing commitments are deducted, including loans, childcare and maintenance payments.
• Foreign currency income, contract work and probation all affect what can be borrowed.

Because lenders stress-test, the maximum offered is not a comfortable budget. Borrowing the maximum leaves no margin for rate rises or income changes.

• Stamp Duty Land Tax applies in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland, and Land Transaction Tax in Wales - each with its own bands and rates.
• First-time buyer relief exists in England and Northern Ireland with a higher nil-rate band, but it is withdrawn above a price cap.
• Thresholds have changed repeatedly. Rates that applied a year ago may not apply now, so confirm the current figures on the government site rather than relying on remembered numbers.
• Additional properties attract a surcharge - buying a second home or buy-to-let property carries a materially higher rate.
• New-build properties may also attract stamp duty on the price above a threshold where an existing home would not.

Note. Stamp duty is a large, lump-sum, non-negotiable cost payable on completion. It must be included in your deposit calculation - it cannot be added to the mortgage.

1. Start three to six months before the current term ends - leaving it late risks rolling onto the lender's standard variable rate, which is usually its most expensive.
2. Check the current lender's product transfer rate first - it may be competitive and avoids legal fees and a full application.
3. Compare with the open market, including any fee, over the period you expect to stay.
4. Valuation and legal incentives vary and can be worth a few hundred pounds.
5. Consider how long you expect to remain - a longer fix suits a planned stay; a shorter one suits an uncertain one.
6. Do not let an early repayment charge trap you into an uncompetitive product without first calculating whether switching still wins after the charge.