UK Mortgage Calculator

The Bank of England base rate directly affects different mortgage types in different ways:

• Tracker mortgages: rate moves automatically with the base rate within days of a BoE decision (e.g. base + 1.75%)
• SVR mortgages: lender adjusts at their discretion — typically follows BoE moves but with delays
• Fixed-rate mortgages: existing fixes are unaffected during the deal period; new fixed rates are priced from swap rates, which reflect market expectations of future BoE moves

The base rate is currently 3.75% (held 17 September 2026, MPC voted 6–3). Next BoE decision: 5 November 2026. Per Bank of England.

The choice depends on rate expectations and personal circumstances:

• 2-year fixed (~5.81% avg): shorter commitment, more flexibility to remortgage if rates fall, lower ERCs after 2 years. Chosen by ~65% of new UK fixes
• 5-year fixed (~5.70% avg): longer payment certainty, slightly lower rate, less remortgaging admin. Better if rates expected to stay flat or rise

Best buys at 60% LTV: 2-yr ~3.55%, 5-yr ~3.76%. The premium for 5-year certainty is small in 2026 — around 0.20% above the 2-year. Both options carry Early Repayment Charges (typically 1–5%) during the fixed period. Per Moneyfacts (commercial rate data, not an official source).

An Early Repayment Charge (ERC) is a fee charged by the lender if the borrower repays the mortgage in full or exceeds the annual overpayment allowance during the fixed-rate or tracker deal period.

ERCs typically operate on a sliding scale:

• 5-year fix: 5% in year 1, 4% in year 2, 3% in year 3, 2% in year 4, 1% in year 5
• 2-year fix: 2% in year 1, 1% in year 2
• Tracker mortgages: often have no ERC at all

On a £250,000 mortgage, a 5% ERC would be £12,500. Most fixes allow up to 10% overpayment per year without ERC. Always check the mortgage offer document for exact terms. Per MoneyHelper.

Most UK fixed-rate mortgages allow overpayments of up to 10% of the outstanding balance per year without an Early Repayment Charge. Tracker mortgages typically allow unlimited overpayments. Always check the offer document for the exact allowance.

On a £280,000 mortgage at 5.70% over 25 years, overpaying £200/month saves approximately £32,000 in total interest and pays off the mortgage about 4.5 years early. Overpaying £500/month saves ~£70,000 and ~9 years.

Overpayments made early in the mortgage have the largest effect because the balance (and therefore daily interest charged) is highest. Per MoneyHelper.

The APRC (Annual Percentage Rate of Charge) is the total cost of the mortgage expressed as a single annual percentage, calculated over the full mortgage term and including:

• Headline interest rate during the deal period
• Standard Variable Rate after the deal expires
• Mandatory fees (arrangement fee, valuation, etc.)

The APRC is almost always significantly higher than the headline rate because it reflects the SVR period. For example: a 5-year fix at 4.50% with a £999 fee may have an APRC of 7.2% — reflecting the assumption that the borrower stays on the SVR for years 6–25.

UK lenders are required by the FCA to display the APRC alongside any advertised rate. Use APRC for true like-for-like comparison, but remember most borrowers remortgage at the end of the deal period. Per FCA.

Common UK mortgage fees include:

• Arrangement fee (product fee): £999–£1,999 typical — often added to the mortgage but accrues interest if so
• Valuation fee: £200–£600 depending on property value (sometimes free)
• Booking fee: £99–£250 for some lenders
• Broker fee: £300–£1,000 if using a fee-charging broker
• CHAPS / telegraphic transfer fee: £25–£40 to send funds to solicitor
• Conveyancing fees: £800–£1,800 (separate from mortgage)
• SDLT: separate to mortgage — payable to HMRC within 14 days of completion

Some products have higher rates with no fees ("fee-free deals"), and some have low rates with high fees. Always calculate total cost over the deal period to compare. Per MoneyHelper.

The impact of a rate difference compounds substantially over time. On a £280,000 mortgage over 25 years:

• At 5.70%: total interest ~£246,800
• At 5.20% (0.50% lower): total interest ~£221,000 — saving ~£26,000
• At 6.20% (0.50% higher): total interest ~£273,000 — extra cost ~£26,000

Even a 0.25% reduction saves ~£13,000. Securing a competitive remortgage at the end of each fix — rather than rolling onto the SVR — is one of the highest-value actions in UK personal finance. A whole-of-market broker can typically secure better rates and access products not advertised directly.

UK residential mortgages use monthly amortisation on a reducing balance. The standard formula is:

Monthly Repayment = P × [r(1+r)^n] ÷ [(1+r)^n − 1]

Where P is the mortgage amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of months. Each repayment covers the monthly interest charge first, then reduces the capital balance.

For a £280,000 mortgage at 5.70% over 25 years: monthly repayment is approximately £1,753. In month 1, ~£1,330 is interest and ~£423 is capital. By month 300 (year 25), almost all of each repayment is capital. Per MoneyHelper.

When a fixed-rate deal expires, the mortgage automatically reverts to the lender's Standard Variable Rate (SVR) — currently averaging ~7.13% across UK lenders (range 6.31%–8.38%). This is almost always significantly higher than available new deals.

On a £280,000 mortgage, the difference between a 5.70% fix and an 8% SVR is approximately £370/month — over £4,400/year. Most UK borrowers remortgage 3–6 months before their deal expires to secure a new rate.

Mortgage offers are typically valid for 3–6 months once issued, so applying early lets borrowers lock in current rates without committing to remortgage immediately. Per MoneyHelper.

Most UK lenders use monthly repayments as the standard — unlike Australia or New Zealand where weekly/fortnightly are common. Some lenders (including Halifax, Nationwide, and some building societies) do allow more frequent repayments on request, but it's not the default.

The genuine saving comes from making one extra monthly repayment per year, not just the frequency change. This is achievable on most UK mortgages either by:

• Making a 13th annual lump-sum overpayment (within the 10% annual allowance)
• Increasing each monthly repayment by ~8.3% (one twelfth)

Either approach saves around £30,000 in interest on a £280k mortgage over 25 years. Per MoneyHelper.

The FCA requires lenders to assess affordability at a stressed rate of approximately 3% above the contract rate, with a minimum 5-year stress test. This buffer protects borrowers from future rate rises.

If a borrower experiences genuine financial difficulty during the mortgage:

• Forbearance options: lenders must consider payment holidays, term extensions, switching to interest-only temporarily, or capitalisation of arrears
• Mortgage Charter (2023): major UK lenders signed up to additional protections including 6-month grace before repossession action and easy switches to interest-only without affordability re-test
• Pre-action protocol: repossession is treated as a last resort under court rules

Anyone struggling should contact their lender as early as possible — protections work best before arrears develop. Free help is available from StepChange or Citizens Advice. Per FCA.

The Lifetime ISA (LISA) is a tax-free savings account for adults aged 18–39 saving for their first home or retirement. The government adds a 25% bonus on top of contributions, up to £1,000 per year.

Key features:

• Annual contribution limit: £4,000 (counts towards £20,000 ISA allowance)
• Government bonus: 25% of contributions, paid monthly, up to £1,000/year
• First home cap: property up to £450,000
• Holding period: account must be open for at least 12 months before withdrawal for first home
• Penalty: 25% withdrawal charge if used for any non-qualifying purpose

A LISA opened at age 18 and maxed out for 22 years could earn £22,000 in bonuses on top of £88,000 contributions — plus investment growth, all tax-free. Per HMRC — LISA.

The Mortgage Guarantee Scheme enables FTBs and home movers to access 95% LTV mortgages (5% deposit) on properties up to £600,000. The government guarantees a portion of the lender's risk on the 91–95% LTV slice, encouraging lenders to offer 95% products.

Eligibility:

• 5% deposit from buyer's own funds
• Property up to £600,000 (UK-wide)
• Repayment (capital & interest) mortgage only — not interest-only
• Primary residence only — not BTL or second homes
• Available from major lenders: Halifax, Nationwide, NatWest, HSBC, Santander, Barclays

The scheme reduces deposit barriers but rates at 95% LTV remain materially higher (~5.5%–6.5%) than at lower LTVs. The total interest difference vs a 75% LTV mortgage can be £80,000+ over 25 years — building up a 25% deposit (potentially via LISA) is materially cheaper if achievable. Per Gov.UK.

First-time buyers in England get SDLT relief on properties up to £500,000:

• Up to £300,000: 0% SDLT
• £300,001–£500,000: 5% on the portion above £300k
• Above £500,000: standard SDLT rates apply (no FTB relief)

Examples:

• £250,000 home: £0 SDLT
• £350,000 home: £2,500 (5% × £50,000)
• £500,000 home: £10,000 (5% × £200,000)
• £550,000 home: £17,500 (standard rates apply — no FTB relief)

Both buyers must qualify as FTBs (worldwide). The relief must be claimed on the SDLT return at completion. Scotland uses LBTT and Wales uses LTT — different rules apply. Per HMRC.

Most UK lenders require a minimum deposit of 5% via the Mortgage Guarantee Scheme. However, deposit size dramatically affects the rate offered:

• 5–9% deposit (91–95% LTV): ~5.5%–6.5% rates; via Mortgage Guarantee Scheme
• 10–14% deposit (86–90% LTV): ~5.0%–6.0% rates
• 15–24% deposit (76–85% LTV): ~4.5%–5.5% rates
• 25–39% deposit (61–75% LTV): ~3.8%–4.5% rates
• 40%+ deposit (≤60% LTV): best market rates ~3.55%–3.76%

For a £350,000 property, deposits range from £17,500 (5%) to £140,000 (40%). Additional costs include: SDLT (varies), conveyancing fees (£800–£1,800), survey (£400–£1,500), and mortgage arrangement fees (£999–£1,999). Per MoneyHelper.

Shared Ownership allows buyers to purchase a 10–75% share of a property and pay subsidised rent on the remainder to a housing association or registered provider. Buyers can "staircase up" over time — buying additional shares until they own 100%.

Key features:

• Initial share: 10–75% of property value
• Income cap: household income under £80,000 (£90,000 in London)
• Rent on unowned share: typically 2.75% per year of the unowned value
• Mortgage required: on the owned share only — typical lenders include Halifax, Nationwide, Leeds BS
• Service charges & ground rent: apply to most leasehold shared ownership properties

Pros: lower initial deposit and mortgage; ladder onto property market sooner. Cons: combined mortgage + rent often costs more than 100% mortgage; restrictions on selling; staircasing fees apply. Per Gov.UK.

Section 24 (introduced April 2017, fully effective April 2020) limits how UK landlords can deduct mortgage interest from rental income. Rather than full deduction, landlords now receive only a 20% basic-rate tax credit on mortgage interest paid.

Worked example for a higher-rate (40%) taxpayer with £15,000 rental income and £10,000 mortgage interest:

• Pre-2017 (full deduction): taxable profit = £5,000 → tax £2,000
• Post-Section 24: taxable profit = £15,000 → tax £6,000, minus 20% credit on £10k interest (£2,000) = £4,000 tax
• Effective increase: £2,000 more tax per year

Section 24 affects higher-rate and additional-rate taxpayers most. Many landlords now hold rental property in limited companies (where Section 24 doesn't apply, but corporation tax and dividend tax do) — a structural decision with implications for SDLT, CGT, and ongoing admin. Per HMRC.

From the Autumn Budget 2024 (effective 31 October 2024), buy-to-let and second-home purchases pay an additional 5% SDLT surcharge on top of standard rates. This was up from the previous 3% surcharge.

Worked examples:

• £200,000 BTL: standard SDLT £1,500 + 5% surcharge £10,000 = £11,500 total
• £300,000 BTL: standard SDLT £5,000 + 5% surcharge £15,000 = £20,000 total
• £500,000 BTL: standard SDLT £15,000 + 5% surcharge £25,000 = £40,000 total

The surcharge applies on the full property value, not just the portion above thresholds. For a typical £300k BTL in 2026, total upfront costs (deposit + SDLT + fees) commonly exceed £100,000. Per HMRC.

BTL mortgages are assessed primarily on the rental income the property can generate, not the borrower's personal income (though most lenders also require a minimum personal income, typically £25,000+).

The key BTL test is the Interest Coverage Ratio (ICR):

• Basic-rate taxpayer: rental income must typically cover 125% of monthly mortgage interest at a stressed rate (often 5.5%–6%)
• Higher-rate taxpayer: minimum coverage typically 145%
• Limited company landlord: typically 125% regardless of personal tax band

Worked example: £200k BTL at 5.5% stress rate = £917/month interest. Lender requires rent of at least £1,329/month (145%) for a higher-rate taxpayer. BTL mortgages are typically interest-only for cash flow reasons, with the capital repaid via property sale or refinancing. Per FCA.

UK residential mortgages use monthly compounding on a reducing balance — unlike Canadian mortgages (semi-annual). The monthly interest rate is simply the annual rate ÷ 12. Lenders must also quote the APRC, which accounts for the SVR revert after the deal period.