Mortgage
Definition
A loan secured against a property, used to fund the purchase. If you fail to keep up repayments, the lender can repossess the property. UK mortgages typically run for 25–35 years. The two main types are repayment (you pay off capital and interest monthly) and interest-only (you only pay interest, repaying the capital at the end).
Why it matters
A mortgage is the largest financial commitment most people will ever make. The type you choose (fixed, tracker, offset), the term length, and the LTV ratio all significantly affect your monthly payments and total cost over the life of the loan. Even a 0.5% rate difference on a £250,000 mortgage changes total interest by tens of thousands of pounds.
Frequently asked questions
How much can I borrow for a mortgage?
Most lenders will offer 4–4.5x your annual income (or combined income for joint applicants). Some will stretch to 5–5.5x for higher earners or professionals. The exact amount also depends on your deposit, credit score, existing debts, and the lender's affordability stress test.
Should I get a fixed or variable mortgage?
Fixed rates give payment certainty for 2–5 years (sometimes longer), which is valuable for budgeting. Variable rates (tracker or discount) can be cheaper initially but expose you to rate rises. Most UK borrowers choose fixed rates, especially in uncertain rate environments.
Related terms
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