A mortgage is a loan to buy property or land. Instead of paying the full price up front, the mortgage bridges the gap between your deposit and what the property costs.
Before you get the keys, you’ll usually pay three kinds of upfront cost.
1. Deposit
Your deposit is the property price multiplied by your deposit percentage. A bigger deposit usually unlocks better interest rates. Lenders ask for a minimum of around 5%, and some want more.
2. Stamp Duty Land Tax (SDLT)
First-time buyer? You pay no Stamp Duty on the first £300,000 and 5% on the part from £300,001 to £500,000. There’s no relief if the property costs more than £500,000. (England and Northern Ireland, rates in force since 1 April 2025.)
Standard SDLT rates (England and Northern Ireland)
Part of the price
Rate
£0 – £125,000
0%
£125,001 – £250,000
2%
£250,001 – £925,000
5%
£925,001 – £1.5 million
10%
Above £1.5 million
12%
Buying an additional property adds a 5% surcharge.
These rates apply in England and Northern Ireland only. Scotland charges Land and Buildings Transaction Tax (LBTT) and Wales charges Land Transaction Tax (LTT), each with different rates and bands. See Revenue Scotland and GOV.WALES.
Worked example: upfront costs on a £200,000 home with a 20% deposit (standard SDLT rates)
Deposit
£40,000
Stamp Duty
£1,500
Moving (up to)
£1,000–£6,000
Stamp Duty here is 2% on the £75,000 above £125,000. A first-time buyer would pay £0. Fees, valuation, survey and conveyancing depend on your lender and solicitor, so they’re not shown.
Affordability is about two things: what you pay to get in, and what you pay every month after.
Available income
Look at your monthly income after the spending that isn’t property-related. A proper budget makes this much easier.
Your monthly mortgage payment
Our Mortgage Calculator (or MoneySuperMarket’s) shows monthly payments based on how much you borrow, how long for, and the interest rate. There are two main kinds of rate:
Fixed
The rate is locked for an agreed period, for example 3 years, so your payment stays the same.
Variable
The rate follows the Bank of England base rate plus an agreed amount, so your payment can go up or down.
Running costs
Don’t forget the bills that come with owning a home: utilities, council tax, TV licence, and home and contents insurance. The budget section within Money Management shows how to keep track of them.
A broker is a person or firm who arranges a deal between a buyer and a seller and earns a commission when it completes. A good one gets a deal that works for you as well as for them.
Re-mortgaging means switching from one mortgage to another on the same property.
The short version
When your mortgage deal ends, you can switch and change the terms: the lender, the interest rate, the amount borrowed and how long it runs.
Early exit penalties
Switch before a fixed deal ends and you’ll usually pay an early exit penalty, typically a percentage of what you still owe. It’s there to discourage constant rate-chasing.
Why re-mortgage?
Reason 1
Lower your monthly payments by borrowing less, stretching the term, or getting a lower rate.
Reason 2
Release equity as cash, for example for renovations. Affordability checks still apply.
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