Mortgage guides
How UK mortgage lending actually works — affordability rules, loan-to-value, the shape of a repayment, overpaying and remortgaging.
Last reviewed 21 August 2026
How lenders decide what you can borrow
UK lenders start from an income multiple — commonly around 4 to 4.75 times income — then apply an affordability assessment that deducts your credit commitments and committed spending, and finally stress-test the payment at a materially higher interest rate. A deal that looks affordable today must still work if rates rise.
Regulators also limit how much of a lender’s book can sit at high loan-to-income ratios, which is why an unusually generous multiple is the exception rather than something you can plan around.
Loan-to-value, and why it changes the price
Loan-to-value is the mortgage divided by the property value. A larger deposit lowers the lender’s risk, so rates tend to improve in steps at 90%, 85%, 80%, 75% and 60%. Being a few hundred pounds short of a band boundary can cost far more over a fixed period than the shortfall itself. The LTV calculator shows how much more deposit would take you into the next band.
What a monthly payment is made of
On a repayment mortgage, each payment covers the interest accrued that month, and whatever is left reduces the balance. Early on, most of the payment is interest; later, most of it is capital. That is why the balance falls slowly at first, and why overpayments made early save the most. See the year-by-year breakdown in the repayment calculator.
Overpaying
Overpaying reduces the balance interest is charged on, so it can cut both the total interest and the term. Most lenders allow penalty-free overpayments up to a limit — often 10% of the balance a year — and charge an early repayment charge above it. Check your offer before committing. The overpayment calculator illustrates the difference.
Remortgaging
When a fixed or discounted period ends, most borrowers move to the lender’s standard variable rate. Remortgaging means moving to a new deal, either with the same lender or a different one. Fees matter: a lower rate with a large product fee is not automatically cheaper. The remortgage calculator shows the monthly difference and how long a fee takes to pay for itself.
Information, not a recommendation
Mortgage questions
What is loan-to-value and why does it matter?
LTV is the mortgage as a percentage of the property value. Lenders price in bands — commonly 95%, 90%, 85%, 80%, 75% and 60% — so a small extra deposit can move you into a cheaper band.
Should I fix my mortgage rate?
A fixed rate makes payments predictable for the fixed period; a tracker moves with the Bank of England base rate. Which suits you depends on your circumstances and tolerance for change, which is a question for a regulated adviser rather than a calculator.
What happens when my fixed rate ends?
You usually move onto the lender's standard variable rate, which is often higher. Most borrowers look at a new deal a few months before the end of the fixed period.