Mortgage in the UK – questions and answers (Part 2)

Today’s article is a continuation of our ‘popular questions and answers’ series. We will try to answer readers’ questions about mortgages in the UK. There’s plenty of useful knowledge ahead!

Questions and answers about a mortgage in the UK

Our blog already features many articles explaining issues related to credit, but I think it’s a good idea to put them all in one place. This way, people planning to buy property in the UK will be able to quickly find the most important information.

I encourage you to read our previous article on buying real estate: Buying a house in the UK - questions and answers, part 1.

Popular questions related to mortgages

1. What is a mortgage?

A mortgage is nothing more than a long term loan from a bank or other financial institution for the purchase of a property. A characteristic feature of such a type of lending is that the security of the loan is the same as the property being purchased, which can be repossessed by the bank if the lender stops paying the mortgage.

2. What requirements must be met to obtain a mortgage in the UK?

This question can be answered in general and more specifically. For a bank to lend us money, in their eyes we must be able to repay the loan. In practice, to get a mortgage in the UK, you must:

• have a regular, legal source of income

• accumulate a deposit of at least 5% of the value of the property

• have a high, or at least an average, creditworthiness and credit score

• have the financial means to meet other needs after the mortgage has been paid off

Checking your financial standing is a detailed process. Lenders take into account all your regular household expenses and recurring incoming bills, as well as any debts such as loans and credit cards, to ensure that you have enough to cover your monthly mortgage repayments (source: How do lenders check I can afford a mortgage?). Your income is also verified - you will be asked to show documents proving your earnings.

3. How to get a mortgage in the UK?

Once we have fulfilled the conditions we wrote about in the previous question, we can apply for a mortgage. This process has two phases. First, we contact the bank and receive a decision in principle - a preliminary approval to obtain a mortgage. Once we have found a property, made an offer and it has been accepted, we formally apply for a mortgage.

When thinking about a mortgage, it is useful to know the prices of properties in the area where you want to buy. A good option is to check online listings on RightMove or Zoopla or your local Estate agents.

You can apply for a mortgage in different places. Some people choose their own bank. Another solution is to contact a broker, preferably one who has access to the whole of market. They have access to a large number of mortgage products and will recommend the right product to suit the customer’s situation. If you are curious whether it is easy to get a mortgage at your bank, it is worth checking out our article on the subject.

4. What are the types of mortgages in the UK?

There are many products in the UK mortgage market. We can divide those into several main types. To make it easier for you to understand their specificities, we have categorised them according to particular criteria:

Purpose of buying property: residential vs. investment mortgage

Aresidential mortgage is a loan used to finance a property in which you plan to live yourself.

An investment loan (Buy to let) is used to purchase a property for rental purposes.

A short-term rental mortgage (Holiday Let) is a special form of buy-to-let mortgage offered to people planning to purchase a property to rent out on Airbnb or Booking.com.

There are many differences between residential and investment mortgages. Investment loans usually have higher interest rates and the required deposit (own contribution) is significantly higher. The method of calculating affordability(creditworthiness) is also different, because in the case of Buy to let and Holiday let loans, the loan amount depends primarily on the expected rental income, not your monthly income.

I would like to take this opportunity to remind you** that if you have a residential loan, you cannot rent out your property. Although there is an exception to this in the form of Consent to Let, unauthorized rental of an apartment may result in termination of the loan agreement** or the need to pay possible penalties.

Capital Repayment versus Interest-only

These loans are called capital mortgages and interest-only mortgages. In the first case, we repay both the interest and the borrowed amount (capital). The loan installment is higher, but at the end of the loan period, we automatically become the full owner of the property.

In the second scenario, we only repay the interest. The loan installments are lower here, but at the end of the loan period, in order to become the full owner of the property, we must repay the entire principal in some way, for example by selling the property or using our savings. You can read more about this in our article: interest-only mortgage.

Interest rates: fixed vs. variable rate mortgage

If, when applying for a mortgage, we believe that interest rates will go up (as they did throughout 2022), we can opt for a fixed-rate mortgage. By doing so, we can be sure that the interest rate and monthly mortgage payment will not change for a given period (usually 2, 3, 5, or 10 years). Such loans are more expensive, but they are a good solution for people who value stability and fixed interest rates.

Variable-rate mortgages (these can be tracker mortgages or standard variable-rate mortgages) have variable interest rates, depending on the interest rate set by the Bank of England. Such mortgages are often more flexible, which can be beneficial for people who plan to make overpayments (we have to stick to certain conditions, e.g., a maximum of 10% per annum).

For more information on types of mortgages, visit the MoneyHelper website in the Understanding mortgagessection and one of our most popular posts, titled Fixed or variable interest rate?

5. What are the interest rates for a mortgage in the UK?

It is very difficult to answer this question, as mortgage interest rates depend on many factors. They will certainly not be lower than the Bank of England’s interest rate, but each bank adds its own margin. This margin is influenced by, among other things:

• Whether the mortgage is taken out for private or rental purposes

• The repayment period

• The ratio of the mortgage amount to the value of the property (LTV)

• The period for which the interest rate is frozen (fixed rate)

• Your credit score

• The bank where you take out your mortgage

On average, in the second half of 2025, interest rates on mortgage offers in the UK range from 4.4% to 4.9% with a 10% deposit. However, this value depends on many factors, and it is impossible to say whether you will be able to obtain such terms or not. As we mentioned, the availability of specific offers is strongly dependent on your financial situation.

If you are wondering whether you are able to buy a property in your current situation, please contact us. It is currently virtually impossible to assess your creditworthiness on your own – our advisors use special tools for brokers, thanks to which we can quickly check what kind of house you can buy and how much your installment will be

6. How much of an equity contribution do you need to get a mortgage?

We have already answered this question. To obtain a mortgage in the UK, you must have a deposit of at least 5% of the property value. It is worth remembering that the more you manage to save before the purchase, the more favorable offers you will receive from banks.

Let’s not forget that when buying a house or apartment, there will be additional fees that we should be prepared for. You can find detailed information on this topic in our article: Additional costs of buying a house or apartment in the UK.

7. How long does it take to receive a mortgage offer?

The waiting period for a mortgage offer varies. Much depends on the overall complexity of your application. For some, it takes a few days or even 24 hours, while other customers have to wait much longer. It is worth being aware that the processing time for a loan application is a very important factor when choosing a lender. Sometimes, customers are willing to take out a more expensive mortgage just so they don’t miss out on the opportunity to buy their chosen property.

However, the mortgage offer is not what prolongs the property purchase process the most. It is conveyancing, i.e., the legal activities related to the transaction, such as checking the legal status and transferring the title to the buyer, that makes it take several months to receive the keys.

For more information on this topic, see the article: How long does it take to buy a house in the UK?

8. Is it worth using a mortgage adviser?

Buying a property is never easy. It gets even more difficult if the property is in a location that is new to you, your mortgage has to meet strict requirements, you don’t speak the language well or finance is not your strong suit. It is precisely in these situations that an experienced mortgage adviser will prove extremely helpful! It will save you from many problems. Our specialists will not only answer all your questions, but will also guide you through all the formalities and recommend a mortgage that meets your requirements.

If you are planning to buy a flat or a house in the UK and need the support of a specialist, I encourage you to contact us via our website. Our advisors will be happy to answer all your questions and if you prefer to contact us by phone, you can also call us. Our telephone number is ** 02476 997 826** and your first consultation is free and without obligation.