UK Mortgage Calculator 2025/26

A mortgage is a loan secured against property. In the UK, most residential mortgages run for 25 to 35 years, though terms from 5 to 40 years are available. The property acts as collateral: if you stop making payments, the lender can repossess and sell it to recover their money. This security is why mortgage rates are lower than unsecured personal loans.

How mortgage repayments work

Each monthly payment combines interest and principal. The interest portion is calculated on your outstanding balance, so it starts high and decreases over time. In year one of a typical 25-year mortgage, around 60% of your payment might go to interest. By year 20, that flips to around 80% going to principal. This is why overpaying early in the term has such a powerful effect on total interest.

Repayment vs interest-only

A repayment mortgage (also called capital and interest) reduces your balance each month. At term end, you own the property outright with no debt. An interest-only mortgage charges you just the interest each month, so your balance never decreases. You must repay the full loan at term end, either by selling the property, using savings, or taking another mortgage. Residential interest-only mortgages are now rare and require a clear repayment strategy approved by the lender.

Understanding loan-to-value (LTV)

LTV measures borrowing as a percentage of property value. A 10% deposit means 90% LTV. Lenders price risk in bands: below 60% LTV gets the best rates, then rates step up at 75%, 80%, 85%, 90%, and 95%. The difference can be substantial. A 60% LTV might get a rate 0.5% lower than 90% LTV, saving thousands over the mortgage term. Building equity through overpayments or property value increases can help you remortgage at a lower LTV bracket.

How the mortgage term affects your payments

A shorter term means higher monthly payments but dramatically less total interest. On a £200,000 mortgage at 5%, a 20-year term costs £1,320/month with £116,741 total interest. Stretch that to 35 years and monthly payments drop to £1,009, but total interest balloons to £224,011. The sweet spot depends on your budget and priorities. Many buyers start with a longer term for affordability, then make overpayments to effectively shorten it.

Tips for getting the best mortgage rate

Save the largest deposit you can, as even small LTV improvements can unlock better rates. Check your credit report for errors before applying. Avoid new credit applications in the months before your mortgage application. Consider using a mortgage broker who can access deals not available directly. Compare the total cost over the deal period, not just the headline rate. Factor in any fees, cashback offers, and the standard variable rate you will revert to after the deal ends.