Mortgage Calculator UK

In the UK a mortgage is a loan secured on property, usually repaid over 25 to 35 years. With a repayment (capital and interest) mortgage each monthly payment clears that month's interest and chips away at the debt, so the loan is gone by the end of the term. With an interest-only mortgage the payment covers interest alone, which keeps it lower, but the whole sum borrowed is still owed at the end. Lenders only offer interest-only deals to borrowers with a credible plan, such as investments or another property, to repay the capital.

Before approving an application, lenders run an affordability assessment rather than relying only on a multiple of salary. Expect to provide:

• Proof of identity and address, such as a passport and recent utility bills.
• Evidence of income: recent payslips and a P60 for employees, or two to three years of accounts or SA302 tax calculations if you are self-employed.
• Three to six months of bank statements showing your spending, savings and any existing debts.
• Details of the deposit and where it came from, including a gifted-deposit letter if family is contributing.
• Information on regular commitments such as childcare, loans, car finance and credit cards.

Formula

M = P × r(1 + r)ⁿ ÷ [(1 + r)ⁿ − 1] Interest only = P × r

M

monthly repayment of capital and interest

P

amount borrowed (price minus deposit)

r

monthly rate: the annual rate divided by 12

n

number of monthly payments (years × 12)

An interest-only payment covers just the monthly interest, so the amount borrowed stays the same until it is repaid from savings, investments or a sale.

Tracker Mortgage

A tracker mortgage has a variable rate set as a fixed margin above a reference rate, almost always the Bank of England base rate. If the base rate is 4% and your deal is base plus 0.75%, you pay 4.75%; when the Monetary Policy Committee moves the base rate, your rate and monthly payment follow, normally from the next payment date. Trackers commonly run for two or five years before reverting to the lender's standard variable rate, though lifetime trackers exist.

The appeal is transparency: the rate moves only with the base rate, not at the lender's discretion. The risk is that payments can rise quickly when rates go up. Some trackers have a collar, a floor below which the rate cannot fall, so check the terms, and run this calculator at a rate one or two points higher to see whether the payment would still be affordable.

Flexible Mortgage

A flexible mortgage lets you change how much you pay without penalty. Typical features are overpayments, which cut the balance and the interest charged; underpayments or payment holidays, usually only after you have built up overpayments; and the option to borrow back money you overpaid. Offset mortgages are a close cousin: savings held in a linked account are set against the mortgage balance, so you pay interest only on the difference. Flexibility can come at the cost of a slightly higher rate, and even standard deals often allow overpayments of up to 10% of the balance a year without an early repayment charge.

Stamp Duty

Stamp Duty Land Tax (SDLT) is charged when you buy property or land in England or Northern Ireland above a threshold. Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax, each with their own bands. SDLT works like income tax: each rate applies only to the part of the price that falls in its band, not to the whole price.

The table shows the residential rates in force from 1 April 2025. On a £500,000 home, a home mover pays nothing on the first £125,000, 2% on the next £125,000 (£2,500) and 5% on the remaining £250,000 (£12,500), a total of £15,000. A first-time buyer pays nothing up to £300,000 and 5% on the next £200,000, which is £10,000. First-time buyer relief disappears entirely when the price is above £500,000.

Buying an additional residential property, such as a buy-to-let or second home, adds a 5% surcharge to every band, and non-UK residents pay a further 2%. The tax is due within 14 days of completion and is normally paid by your solicitor or conveyancer, so add it to your upfront costs alongside the deposit, legal fees and survey.

Frequently asked questions

Sources

• GOV.UK – Stamp Duty Land Tax: residential property rates
• MoneyHelper – Mortgages
• Bank of England – Interest rates and Bank Rate