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YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
Want to know how much a mortgage lender may be willing to lend you? Simply click the mortgage affordability calculator button below.
Affordability calculators are a helpful guide at the beginning of your home buying journey, as they can help you to focus your search on properties that are likely to be within your budget.
To find out what you could borrow, you'll need to know:
A first-time buyer is someone who has never owned a property anywhere in the world. Even if you didn't use a mortgage, or inherited a property, you won't be classed as a first-time buyer by mortgage lenders.
For joint mortgage applications, all applicants must meet this definition for the purchase to be considered a first-time buyer application.
Although certain first-time buyer mortgage deals exist, the majority of mortgages are available to all buyers. Stamp duty relief, on the other hand, is only available to first-time buyers that meet the above criteria.
A remortgage is when you switch mortgage provider, usually to take advantage of a more competitive interest rate. This type of finance is used to repay the mortgage on a property that you already own, rather than to buy a new one.
Most people remortgage when they are approaching the end of their current deal – you can compare mortgage deals and usually lock in a new rate around six months before your existing deal term ends. If you're on your lender's standard variable rate (SVR), you can remortgage at any time without early repayment fees.
When you move house, you can often take your existing mortgage with you – this is known as porting your mortgage. It can be an easier option, but won't always be the cheapest, so make sure to look at the best mortgage rates that other lenders have available too.
Most, but not all mortgages are portable, so you may have no choice but to take out a mortgage with another lender if you're keen to move. Look out for early repayment charges (ERCs) and exit fees if you're still in a fixed-rate or introductory rate period, however.
A buy-to-let mortgage is to buy rental properties for investment purposes, so is typically only used by landlords.
With buy-to-let mortgages, lenders base your borrowing on the potential rental income (or rental yield) of the property, rather than your personal income. Usually they will expect this to cover 125-145% of the monthly mortgage repayments.
You'll also need a higher deposit compared to a residential mortgage. Most lenders ask for at least 25% of the property value, although it can vary between 20-40%.
The table below shows some of our best fixed-rate mortgage deals, based on the initial rate available and different loan-to-value (LTV) ratios (LTV is the amount you borrow compared to the value of the property).
|LTV||2-year fixed (initial rate)||5-year fixed (initial rate)|
|90||Halifax - 4.84%||Halifax - 4.43%|
|80||Furness BS - 4.43%||Halifax - 4.18%|
|70||Halifax - 4.39%||Halifax - 4.03%|
|60||Halifax - 4.34%||Halifax - 3.98%|
Rates are provided by Mojo Mortgages and updated every 12 hours. THESE DEALS MAY NOT BE AVAILABLE AT THE POINT AT WHICH YOU ARE READY TO SUBMIT AN APPLICATION. Remember that you may not be eligible for all mortgage deals depending on your circumstances. It's also important to consider fees as well as the initial rate when looking at mortgage deals as these can sometimes make deals more expensive.
Find out what today's average mortgage interest rates are.
90% LTV 2 Year Fixed - Halifax - 4.84% Repayment mortgage of £252,000.00 over 25 years, representitive APRC 7.4%. Repayments: 26 months of £1,455.52 at 4.84% (fixed), then 274 months of £1,877.58 at 7.74% (variable). Total amount payable £552,300.44. Early repayment charges apply until 31-Aug-2025. Other fees may apply.
80% LTV 2 Year Fixed - Furness BS - 4.43% Repayment mortgage of £224,000.00 over 25 years, representitive APRC 7.2%. Repayments: 24 months of £1,241.81 at 4.43% (fixed), then 276 months of £1,686.12 at 7.99% (variable). Total amount payable £489,649.08. Early repayment charges apply until 2 years. Other fees may apply.
70% LTV 2 Year Fixed - Halifax - 4.39% Repayment mortgage of £196,000.00 over 25 years, representitive APRC 7.3%. Repayments: 26 months of £1,082.72 at 4.39% (fixed), then 274 months of £1,457.40 at 7.74% (variable). Total amount payable £427,478.32. Early repayment charges apply until 31-Aug-2025. Other fees may apply.
60% LTV 2 Year Fixed - Halifax - 4.34% Repayment mortgage of £168,000.00 over 25 years, representitive APRC 7.3%. Repayments: 26 months of £924.07 at 4.34% (fixed), then 274 months of £1,249.81 at 7.74% (variable). Total amount payable £366,473.76. Early repayment charges apply until 31-Aug-2025. Other fees may apply.
90% LTV 5 Year Fixed - Halifax - 4.43% Repayment mortgage of £252,000.00 over 25 years, representitive APRC 6.5%. Repayments: 62 months of £1,396.22 at 4.43% (fixed), then 238 months of £1,818.20 at 7.74% (variable). Total amount payable £519,297.24. Early repayment charges apply until 31-Aug-2028. Other fees may apply.
80% LTV 5 Year Fixed - Halifax - 4.18% Repayment mortgage of £224,000.00 over 25 years, representitive APRC 6.4%. Repayments: 62 months of £1,210.10 at 4.18% (fixed), then 238 months of £1,609.82 at 7.74% (variable). Total amount payable £458,163.36. Early repayment charges apply until 31-Aug-2028. Other fees may apply.
70% LTV 5 Year Fixed - Halifax - 4.03% Repayment mortgage of £196,000.00 over 25 years, representitive APRC 6.3%. Repayments: 62 months of £1,043.10 at 4.03% (fixed), then 238 months of £1,405.67 at 7.74% (variable). Total amount payable £399,221.66. Early repayment charges apply until 31-Aug-2028. Other fees may apply.
60% LTV 5 Year Fixed - Halifax - 3.98% Repayment mortgage of £168,000.00 over 25 years, representitive APRC 6.3%. Repayments: 62 months of £890.17 at 3.98% (fixed), then 238 months of £1,204.78 at 7.74% (variable). Total amount payable £341,928.18. Early repayment charges apply until 31-Aug-2028. Other fees may apply.
When you borrow a mortgage loan, you pay it back with interest (extra money on top of the amount you borrowed), as this is how the lender makes money.
When you apply for a mortgage, the interest rate for that particular deal will be made clear to you. However, bear in mind that if you opt for a variable rate mortgage, it could change at any time.
The rates available to you will depend on your financial circumstances, market competition and the Bank of England base rate. The best mortgage rates are usually available to applicants with larger deposits, because lenders view them as less of a risk than those with smaller deposits.
If you're looking for the cheapest mortgage rate available to you, you'll likely find that they are much higher now than they were a few years ago - due to economic factors and multiple increases in the Bank of England's base rate of interest.
However, there are still ways you can increase your chances of securing a competitive rate:
Save as large a deposit as you can afford. Generally the bigger the deposit, the lower the interest rate, as lower loan-to-value (LTV) mortgages are seen as less risky by lenders
If you're remortgaging, you can lock in a new rate six months before your deal ends, avoiding any early repayment charges (ERCs). If a better rate becomes available within that same six months before, you can usually switch again
Speak to a mortgage broker who can compare all of the best mortgage deals from across the market to see which are available to you
If you take out a mortgage on a repayment basis, you'll repay some of the capital (loan amount) you borrowed and some interest each month.
This means by the end of the mortgage term, you will have repaid the mortgage in full and will own your home outright.
The vast majority of residential mortgages are taken out on a repayment basis.
With interest-only mortgages, you only pay the interest on the mortgage each month – you don’t pay anything to clear the capital until the end of your mortgage term. At this point you need to repay the full loan that you originally borrowed.
For this reason, interest-only mortgages are usually only used to purchase buy-to-let properties. Landlords are usually happier than homeowners to sell off their property at the end of the mortgage term to repay the loan. Interest-only mortgages are available for residential properties in some very rare cases.
All mortgages have either fixed-rate or variable-rate interest.
With fixed-rate mortgages your interest rate won't change for a set period of time. There are various deal lengths available and you fix the rate for that amount of time, usually two, five or 10 years.
Knowing that your rate won’t increase within a specific time frame makes budgeting for your monthly repayments much easier. However, you won't benefit if interest rates decrease whilst you're on a fixed-rate deal.
There are three different types of variable-rate mortgages:
Standard variable rate (SVR)
All variable interest rates are subject to change at any time. The introductory period of variable rate deals can be cheaper than a fixed-rate deal initially, but become more expensive if rates rise (or cheaper if rates fall).
This is the mortgage lender’s default rate and is usually higher than any of their other deals. You will automatically end up on this rate at the end of any other type of deal, so it’s often best to switch to a new deal as soon as your existing one ends.
However, being on an SVR does offer more flexibility than other mortgage deals, given that you're not tied into the rate. Sometimes it can make sense to remain on an SVR for a short period of time if you're planning to move home soon.
With discount mortgages, you get a discount on the lender’s SVR for a specified period of time. Your rate will go up or down along with the SVR, but there's no guarantee that this will happen or by how much.
With tracker mortgages, during the initial deal period, your mortgage rate is a certain level above an external financial indicator, usually the Bank of England base rate. Your rate will follows its movements, matching how much it rises and falls by.
If you're buying a home for the first time, it can be really tricky to save up the money required. However, there are some schemes designed to help you get on the property ladder.
In April 2021 the government launched the mortgage guarantee scheme to encourage more lenders to offer 5% deposit mortgages. The scheme ends in December 2023, however, many lenders are likely to continue offering 95% mortgages beyond this date.
As a first-time buyer, you may benefit from paying less stamp duty than those who have already owned a property. In England and Northern Ireland, you get zero-tax relief on properties up to £425,000 (compared to £250,000), as long as it costs less than £625,000.
If you're struggling to save a deposit for your first home and are between the ages of 18-40, it might be worth opening a Lifetime ISA. The government will provide a 25% tax-free bonus on your savings, helping you save a deposit more quickly.
The First Homes Scheme provides designated properties for first-time buyers and key workers in England at 30-50% below market value. These properties are in limited locations, but availability is expected to increase in the coming years.
If you're struggling to save up a deposit for a mortgage on a home that meets your needs, shared ownership may be an option for you. You buy a 10-75% share of a home and pay rent to a housing association who own the rest.
The Right to Buy Scheme allows certain council tenants to buy their rented home at a discount. Different rules apply across the UK so check your government's website for details. The very similar Right to Acquire Scheme applies to housing association tenants.
With so much change in the mortgage market over the past year or so, it's more important than ever to get expert advice. Consult a broker who can compare mortgages from across the market to find the best deal for you.”Kellie Steed, Mortgage Content Writer
A mortgage is a loan from a bank, building society or other lender that you use to buy property. You typically repay the mortgage with interest, each month, usually over a long period of time (the mortgage term), normally around 25-30 years.
This type of loan is secured on the property you’re buying, meaning that if you default on payments (fail to repay the loan), the lender could potentially repossess your home (take it back). This is usually a last resort, but it's important to understand that you won't own the property outright until the entire loan has been repaid.
You can use a property bought with a mortgage as soon as the purchase has been completed. However, being able to continue doing so depends on you keeping up with the repayments each month.
When applying for a mortgage, it's important to get a competitive rate as this will determine how much you pay each month
An independent mortgage broker can compare mortgages across the whole market very quickly and help you find the deal that is most suited to your individual circumstances.
Important questions to consider when choosing a mortgage are:
How much will my monthly mortgage payments be?
What arrangement fees will I need to pay?
If I choose a variable-rate mortgage, what happens when interest rates rise?
Always factor in the fees as well as the interest rate when you're deciding which is the most affordable option overall. The easiest way to do this is to look at the total cost over the deal period.
The mortgage market is incredibly dynamic and it's a good idea to stay ahead of any major changes, whether you're buying your first home, or have had a mortgage for many years. Checking out the latest mortgage statistics and following mortgage market news will help you stay in the know.
The typical length of a mortgage in the UK is around 25-30 years, but the term can be shorter or longer, depending on your preference, income and age.
A longer term mortgage will allow you to keep your monthly costs lower, as it will spread out the repayments over a longer duration. But this also means that it takes you longer to repay the mortgage, and you’ll pay more interest overall as a result.
The loan to value (LTV) is the ratio between the value of your property and the amount you're borrowing. For example, if you take out £112,500 mortgage on a £150,000 property, the loan would be 75% LTV. You would therefore need a deposit of 25% (or £37,500).
All mortgages have a maximum LTV that it's possible to borrow, and typically, the higher the LTV (the more you borrow compared to the cost of the property), the higher interest rate you’ll pay.
First-time buyers tend to need to borrow a higher percentage of the property’s value than existing homeowners. This is because if you already have a home, you typically build up equity in the property as you repay the loan and when house prices rise. Equity can be used as a deposit when you remortgage or move home.
APRC stands for Annual Percentage Rate of Charge and is a way of comparing different mortgages. It takes the overall rate charged over the lifetime of the mortgage, including any fees, and gives you a baseline comparison rate.
Mortgages generally offer a lower interest rate for the first two to 10 years then revert to the lender’s standard variable rate (SVR). Every lender has their own SVR and this is typically (but not always) the most expensive rate available.
The APRC uses both of these interest rates to show the real cost over the whole term of the mortgage. This helps you to find out whether the deal with the lowest initial rate is really the cheapest overall.
As this assumes you’ll keep the same mortgage for the whole term, it’s not always a useful way to compare deals, however. Looking at the total cost over the deal period can be a better way to find the cheapest option, if you're planning to switch mortgages when each deal period ends.
To make the home buying process smoother, you should consider getting a mortgage in principle. This is often known as a decision in principle (DIP) or an agreement in principle (AIP) by lenders.
A mortgage agreement in principle is a theoretical mortgage offer, assuming you are able to meet the full criteria when you go through the full application process.
It's useful when looking at properties, as it gives the impression that you are a serious buyer. It's also a good indicator that you will be approved for a mortgage down the line, so long as the information you provide when you apply for it is as accurate as possible.
Most residential mortgages are only offered on a repayment basis, so if you're purchasing a home to live in, then you will most likely need to get a repayment mortgage.
This is because interest-only mortgages are much riskier, as you still owe the full loan amount at the end of the term. You need a repayment plan in place and if this doesn't work out, you'll need to sell the property at the end of the term.
However, if you're purchasing a buy-to-let property, interest-only mortgages are commonly available. Most landlords use interest-only mortgages, as it means the monthly mortgage repayments are lower, allowing them increased profit from the rent. This can be used for property maintenance or saved towards repaying the full loan at the end of the mortgage term. Plus, landlords are usually happier to sell a investment property than residents are to sell their home at the end of the term, if necessary.
A repayment mortgage costs more each month than an interest-only mortgage. However, you will repay more interest overall with an interest-only mortgage, even though the monthly repayments are lower, as you’re paying interest on the full capital amount for the entire mortgage term.
For example, if you had a mortgage of £200,000 at 5% over 20 years, the interest would be a total of around £116,876 if you took out the mortgage on a repayment basis. If you took it out on an interest-only basis, however, you would end up paying £200,146 in interest and would still owe £200,000 capital at the end.
When lenders calculate affordability, they generally take income, and outgoings into account, as they will want to be sure that you can afford the repayments each month.
A mortgage affordability calculator can give you an idea of what you may be able to afford, however, it's important to understand that your version of affordable may not always align with the lender's.
If you spend a large amount of your monthly income you may be seen as a riskier prospect by the lender. Especially if you are using your income to repay lots of other debts.
Before applying for a mortgage it’s a good idea to have a look at your finances and make sure you are budgeting sensibly. Identify areas where you could cut back or debts that you could repay before applying.
Pick from our highlighted articles below or take a look at all of our mortgage guides.
*Average savings based on Mojo Mortgages remortgage sales data compared to the average SVR in February 2023. Actual savings will depend on individual circumstances.
Page last updated: 30 May 2023