UK finance jargon - in plain English
A loan to buy a property, secured against that property.
A mortgage is a long-term loan from a bank or building society used to buy property. The property acts as security, meaning if you stop making payments the lender can repossess it. Many UK mortgages run over decades.
You buy a £250,000 home with a £25,000 deposit, so you need a £225,000 mortgage. At 4.5% over 25 years, monthly repayments are around £1,250 and total repayment is roughly £375,000. That extra £150,000 is the cost of borrowing the money.
Numbers simplified for illustration. Actual rates and tax rules may change.
People focus on the monthly payment and ignore the total cost. A longer term shrinks monthly payments but dramatically increases total interest paid. It's worth running the numbers over 25 years vs 30 before committing.
This is an illustrative estimate for repayment mortgages only. It does not account for arrangement fees, valuation fees, insurance, early repayment charges, or future rate changes. Your actual monthly payments will depend on the lender's specific terms. Always get a personalised illustration from a mortgage lender or qualified broker before making any decisions.
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This is an illustrative estimate. It assumes your interest rate stays constant for the full term and that your lender allows overpayments without early repayment charges. Many lenders cap penalty-free overpayments at 10% of the outstanding balance per year. Check your mortgage terms before overpaying.
Want to compare all calculators in one place? Visit the MoneyTranslator Calculator Hub.