How do mortgages work?
A mortgage is a loan you take out to buy property or land. The loan is offered at a fixed or variable interest rate and secured against you home, which means that if you don't keep up with repayments, the lender can repossess the home.
When you take out a mortgage, you put up a deposit from your own savings, that pays for a percentage of the purchase price of the property. The rest of the purchase price is borrowed through a mortgage, which you repay on a monthly basis.
For example, if you're buying a home worth £200,000 and you put up a 20% deposit, you'll have to borrow the remaining 80%. This is what is known as the Loan to Value (LTV) ratio.
The mortgage rate you'll be offered depends on your LTV and your particular financial circumstances such as your credit history and income. Typically, the lower your LTV the better your chances of being offered a lower mortgage rate.
How do mortgage lenders decide how much you can borrow?
When you get a mortgage quote, lenders will be looking at a range of factors. These include:
how much deposit you have
how big a mortgage loan you want
your employment status
your credit rating
how much you can afford (income vs. existing outgoings and commitments)
what kind of property you want to buy.
What type of mortgage should you choose?
Getting the right mortgage depends on your circumstances. Our mortgage comparison can help you:
find which types of mortgages are available to you
pick the mortgage term you want
find the best mortgage rates
check which fees apply.
If you want to see how much you could borrow, you can use our mortgage calculator
The mortgage comparison above includes every mortgage, with current mortgage rates, UK wide. You won't find a more comprehensive mortgage comparison, UK wide, so you're guaranteed to find the UK's mortgage best buys here.
To find the best mortgage lenders, check smaller companies as well as bigger lenders like HSBC, Barclays, NatWest and Santander. That way you'll be able to make sure you're finding the cheapest mortgage rates, UK wide.
You'll need to find the best mortgage rates that fit your needs to get the right mortgage.
What type of mortgage deals should I be looking for when I do a mortgage comparison?
When you do your mortgage comparison, you'll be looking for the best mortgage deals for you. To help you work out which one this is, you should look for one that:
Costs less. How much your mortgage costs depends on its interest rate and any fees that come with it. Compare every deal that fits what you need to find the best mortgage interest rates, lowest fees and the right loan to value (LTV).
Will accept you: Some mortgages are especially for specific types of borrowers, such as first-time buyers. Not all mortgage offers are suitable for everyone. Applying for the right types of mortgage can avoid wasting your time and damaging your credit record.
Getting a better deal with a remortgage
If you want to stay in your home but get a better deal on your mortgage, you can look for other mortgage lenders to switch to. This is called a remortgage.
If current mortgage interest rates available in the market are cheaper than what you're paying for your existing mortgage, you could remortgage to save money. However, be aware that fees may apply depending on the type of mortgage you have.
Here's how to remortgage and check whether getting a new deal is your cheapest option.
Compare remortgage deals here.
Buying your first home
There are several types of mortgages available for first time buyers. There are also lots of schemes to help you get on the property ladder.
Here's where to find help and how to check you can afford to buy a house. Our mortgage affordability calculator can help. A mortgage payment calculator will show you how much you'll have to pay each month, and overall.
Compare first time buyer mortgages here.
If you already own your home but want to move, you may need a new mortgage.
Check if your existing mortgage is portable. If it is, you can move it to a new property.
If it's not portable but you think the best mortgage deal is with a different lender, you can get a new mortgage when you move house. You might pay a fee for switching lender part-way through your term but if the new deal is cheaper, it could still work out better overall.
Compare mortgages you can get when you move home.
Decide what type of mortgage you want
When you take out a mortgage, there are different types of interest rates available. Getting the right mortgage interest rate could save you money, or give you a guarantee that your payments won't increase for several years.
With fixed rate mortgages, the interest rate is set at the start and stays the same until the fixed term ends. This means your mortgage repayments are the same each month. Generally, interest only mortgage rates are higher. But, if the Bank of England base rate rises, you could end up saving money as your mortgage repayments won't rise with it.
At the same time, if the base rate happens to fall, you can't take advantage of lower interest rates without having to remortgage, in which you may have to pay fees.
With a variable rate mortgage, discount mortgage or tracker mortgage, rates are often lower at the start, but they could increase. This means your mortgage repayments can go up and down based on factors outside your control, such as the economy and the Bank of England's base rate.
A mortgage interest calculator could help you work out the total cost and monthly payments, based on different interest rates.
Here's how to decide which type of mortgage rate is right for you.
How to choose between different types of mortgages
There are different types of mortgage and you'll need to decide which type you want.
Most mortgages are repayment mortgages. This means your monthly payments gradually clear the amount you owe.
Sometimes people can get an interest-only mortgage. This is where you only pay off the interest. It can mean your monthly payments are lower, but it can cost more in the long run. At the end of your mortgage term, you'll still owe the same as when it started. You could use an interest-only mortgage calculator to help you work out how much you can borrow and how much your payments will be.
Here's how to decide which type is best.
Should I use a mortgage advisor?
A mortgage advisor or mortgage broker is someone who helps you to find mortgage deals and advises you on your options.
Going through a broker or finding a mortgage yourself just depends on your preference. Sometimes, having the best mortgage broker can make the experience less stressful and more streamlined.
Just remember that brokers don't necessarily check every mortgage company. Some mortgage companies don't work with brokers.
Get help from a mortgage broker
What do I need to provide to lenders when I apply for a mortgage?
Don't apply for a mortgage until you've found the one you want and are confident that you're eligible for it. Doing multiple applications could affect your credit rating.
To apply, you'll need to share with the lender or your mortgage advisor:
proof of your income (e.g. payslips, benefits, child maintenance)
bank statements (to show your spending habits)
financial commitments (household bills, commuting costs, childcare)
spending habits (holidays, hobbies)
money owed (credit cards, loans, car finance etc.)
They'll also check your credit rating to see if you're a reliable borrower. They'll be looking to see if you've missed any payments or made any late payments. If you've got a good credit score, you'll be more likely to get the cheapest mortgage interest rates.
Don't forget that using our mortgage calculator won't affect your credit score.
What do I need to think about before taking out a mortgage?
Getting a mortgage is a major decision. For most people buying a new home is the most expensive purchase they'll ever make and may require rethinking some of your priorities in terms of how you manage your money.
Missing repayments on your mortgage can have lasting consequences. However, if you get a mortgage that you can afford and make your mortgage payments on time, it can go along way in securing your financial future.