What is the UK Mortgage?
UK mortgages are usually repayment (capital and interest), so the balance clears by the end of the term. Interest-only mortgages have lower monthly payments but the full capital remains outstanding at the end — now mostly restricted to buy-to-let.
Your loan-to-value band drives the rate you are offered. The thresholds at 60%, 75%, 80%, 90% and 95% matter enormously — crossing one can change your rate by 0.5% or more.
Formula & worked example
Interest only = L × i
LTV = Loan / Property price × 100
Worked example: a £320,000 property with a £48,000 deposit gives a £272,000 loan at 85% LTV. At 4.75% over 25 years the monthly repayment is about £1,551, with total interest of roughly £193,000. Increasing the deposit to £80,000 would drop LTV to 75% and typically unlock a better rate.
How to use this uk mortgage calculator
- Enter the property price and your deposit.
- Watch the LTV band — pushing your deposit over a threshold often saves more than shopping rates.
- Use the rate from an actual mortgage illustration, not a headline rate.
- Compare terms: 25 years is standard, but 30–35 year terms are increasingly common.
Smart tips
- Getting from 85% to 80% LTV can cut your rate by 0.3–0.5%, which is often worth more than a slightly bigger deposit costs.
- UK fixed rates typically run 2–5 years, then revert to the lender's standard variable rate — remortgage before that happens.
- Overpay up to the usual 10% annual allowance without penalty; even small overpayments cut years off the term.
- Factor in arrangement fees of £999–£1,999; a lower rate with a big fee is not always cheaper on a small loan.
- Longer terms lower the monthly payment but sharply raise total interest — check the table before extending.
Frequently asked questions
How much deposit do I need for a UK mortgage?
A minimum of 5%, but 10–25% unlocks meaningfully better rates. Each LTV threshold — 90%, 80%, 75%, 60% — improves pricing.
What is loan to value?
The loan as a percentage of property value. Lower LTV means less lender risk and therefore a better interest rate.
Repayment or interest-only?
Repayment for residential purchases — it clears the debt. Interest-only is now mainly for buy-to-let, where the property is sold or refinanced later.
What happens when my fixed rate ends?
You revert to the lender's standard variable rate, which is usually much higher. Remortgage 3–6 months before the fix expires.
Want the theory behind the numbers? Read our UK mortgage guides on the Money Blog.