See your monthly payment, total interest cost, and how overpayments can shave years off your mortgage. Enter the house price, deposit, rate, and term — then explore what happens when you overpay.
A mortgage is a secured loan used to buy property. You borrow a percentage of the house price (the loan), and repay it over a fixed term (typically 25 years) at an interest rate set by your lender. Most UK mortgages are repayment mortgages, meaning each monthly payment includes both interest and principal. Over time, the interest portion shrinks and the principal portion grows — this is called amortisation.
An alternative is an interest-only mortgage, where you pay just the interest each month and the full loan at the end. Interest-only is riskier because you must have a separate repayment plan (e.g., an ISA or investment) and is less commonly available today.
This table shows how your loan balance shrinks over the term. In early years, most of your payment goes to interest. Over time, more goes to principal. With overpayments, you pay down principal faster and save on interest.
| Year | Opening balance | Interest paid | Principal paid | Closing balance |
|---|
Even small overpayments compound dramatically over 25 years. When you overpay, the extra amount goes directly to principal, reducing the balance that accrues interest next month. This creates a snowball effect — the lower your balance, the less interest you pay, and the more of each payment goes to principal.
Overpay whenever you can. An extra 50 pounds a month on a 300k mortgage at 5% can save you 30,000 pounds in interest and cut 5 years off your term. It's one of the most mathematically powerful financial moves available to UK borrowers.
Your LTV is your loan as a percentage of the house price. It determines the rates available to you. Higher LTV (lower deposit) means higher rates and stricter affordability checks. Below are typical rate tiers as of 2026:
| LTV % | Deposit required | Typical fixed rate range | Notes |
|---|---|---|---|
| 95% | 5% | 5.5–6.5% | First-time buyers; higher rates and stricter criteria |
| 90% | 10% | 5.1–6.0% | Common for first-time buyers; more lenders available |
| 80% | 20% | 4.5–5.5% | Sweet spot; good rates, reasonable deposit |
| 75% | 25% | 4.3–5.3% | Lower rates; strong financial position |
| 60% | 40% | 4.0–5.0% | Excellent rates; very strong position |
A larger deposit doesn't just get you a better rate — it saves you tens of thousands in interest. Saving an extra 30k deposit reduces your LTV from 90% to 80%, which might drop your rate by 0.5%, saving over 40k over 25 years.
| Type | How it works | When to choose | Risk |
|---|---|---|---|
| Fixed rate | Rate locked for a set period (e.g. 5 years). Payments stay the same regardless of base rate changes. | When rates are low or you want certainty. Most common choice. | Low if you stay the full term. If rates fall, you pay more than others. |
| Tracker rate | Follows the Bank of England base rate plus a margin (e.g. base + 1.5%). Payments vary monthly. | If you think rates will fall. Works best with good savings buffer. | High. Payments can jump significantly and quickly. |
| SVR (standard variable) | Lender's standard rate, unlinked to base rate. Lenders can change it at will. | Almost never. Only if you plan to remortgage within 6 months. | Very high. Your lender can raise rates without warning. |
Most fixed-rate mortgages allow you to overpay by up to 10% per year without penalty. Larger overpayments or full early repayment will incur an ERC, typically 1–5% of the amount repaid. Always check your mortgage offer. The calculator above assumes you are within your 10% annual allowance.
When you buy, you'll pay Stamp Duty Land Tax (SDLT) based on the house price. First-time buyers get relief up to 425k. For a 300k purchase as a first-time buyer, you pay nothing. But a 500k property costs around 15k in stamp duty. Use our stamp duty calculator to see the exact cost.
Stamp Duty calculator — what you'll pay when you buy · Compound Interest calculator — how your savings grow with investment · ISA vs GIA — tax efficiency of your savings · Pension calculator — retirement planning
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