Mortgage Guide

How a UK mortgage works

A mortgage is a long-term loan secured against your home. You borrow a percentage of the purchase price (the loan-to-value or LTV), pay a deposit for the rest, and repay the loan with interest over a term — typically 25 to 35 years.

If you stop paying, the lender can repossess the property. That's why lenders look very carefully at affordability, deposit, credit history and the property itself.

Repayment vs interest-only

• Repayment (capital and interest) — your monthly payment clears the debt over the term. The standard choice for residential buyers.
• Interest-only — you pay only the interest each month and repay the capital at the end via a separate vehicle. Mainly used for buy-to-let.

Fixed, tracker and variable rates

• Fixed rate — your interest rate is locked for 2, 3, 5 or 10 years. Predictable; usually carries an early repayment charge.
• Tracker — moves up and down with the Bank of England base rate plus a fixed margin.
• Standard Variable Rate (SVR) — the lender's default rate after your fixed/tracker deal ends. Almost always more expensive — re-mortgage before you fall onto SVR.
• Discount — a discount off the lender's SVR for a set period.
• Offset — links your savings to your mortgage so you only pay interest on the net balance.

Loan-to-Value (LTV) and why it matters

LTV is the loan as a percentage of the property value. The lower the LTV, the better the rate you'll be offered. Pricing usually steps down at 90%, 85%, 75% and 60% LTV bands — pushing your deposit into the next band can move you to a materially cheaper rate.

What lenders look at

• Income — employed, self-employed (typically 2 years' accounts/SA302s), bonus and commission usually counted at 50%.
• Outgoings — credit commitments, childcare, school fees, season tickets.
• Credit history — searches, missed payments, defaults, CCJs, bankruptcies.
• Deposit source — gifted deposits need a letter from the donor.
• Property — non-standard construction, flats above commercial, short leases (<80 years) and listed buildings can restrict choice.

Costs beyond the rate

• Arrangement / product fee — typically £0–£1,999, can be added to the loan.
• Valuation fee — sometimes free, sometimes £150–£500 depending on price.
• Booking and CHAPS fees.
• Early Repayment Charges (ERCs) — usually 1–5% of the balance during the fixed period.

Specialist mortgage types

• First-time buyer products — higher LTV, sometimes lower rates and gifted-deposit friendly.
• Buy-to-let — interest-cover ratios (ICR) instead of income multiples.
• Shared Ownership / Help-to-Buy / First Homes — scheme-specific lender panels.
• Self-build, bridging, holiday-let and later-life lending — broker-only territory.

Broker vs going direct

A whole-of-market broker can compare thousands of products, including lenders that only work through intermediaries. Brokers are typically paid a commission by the lender and/or a fee from you (£0–£500). For complex cases, a broker is almost always worth it.

Getting application-ready

• Pull your credit file and fix any errors before you apply.
• Avoid new credit, payday loans and large gambling transactions in the 3–6 months before applying.
• Have 3 months' payslips, 3 months' bank statements, ID and proof of address ready.
• Self-employed: latest 2 years of SA302s and tax year overviews.

Things that will make it difficult to get a mortgage

These are the property-side issues that most often derail a mortgage application. Spotting them before you offer saves weeks of wasted process — Frontdoor flags many of them automatically as warning banners on the listing page.

• Short leases — most lenders won't lend where less than 70–85 years remain at the end of the mortgage term. A 75-year lease with a 25-year mortgage leaves 50 years remaining, often unmortgageable.
• Non-standard construction — concrete panel, prefab, timber frame, thatched, steel-framed. Some lenders refuse entirely; others demand larger deposits.
• Above commercial premises — flats above takeaways, pubs and certain retail are restricted by many lenders due to noise, smell and fire risk.
• High-rise cladding / EWS1 — post-Grenfell, an EWS1 fire safety form is required for many flats; buildings without one can be unmortgageable.
• Japanese knotweed — presence within 7 metres is a significant restriction; some lenders refuse without a treatment plan with insurance-backed guarantee.
• Flood risk — Zone 3 properties are refused by some lenders or require specialist insurance as a condition of lending.
• Subsidence history — prior claims (even fully remediated) require specialist surveys and restrict lender choice.
• Planning enforcement notices — unresolved enforcement notices prevent lending until discharged.
• Sitting tenants — properties with protected tenants cannot typically be mortgaged on a standard residential mortgage.
• Self-build and uninhabitable properties — no functioning kitchen or bathroom means standard mortgages won't apply; bridging or self-build products are needed.
• Extremely high service charges — some lenders cap the percentage of income that can go on service charge, restricting borrowing in premium blocks.