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

This second part of our mortgage Q&A covers eligibility, deposits, mortgage types and the application process. You can also read UK mortgage questions and answers, Part 1.

1. What is a mortgage?

A mortgage is a loan secured against a property, commonly used to buy a home. You, the borrower, are responsible for the repayments. If you do not keep up with them, the lender may repossess the property. MoneyHelper explains this distinction in its guide to secured borrowing.

Buying with a mortgage does not mean waiting until the loan is paid off to become an owner. You acquire the property interest you are buying through the purchase; the lender holds security over it until the mortgage is repaid.

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

Each lender sets its own criteria. For a residential mortgage, it will usually assess:

• Income and evidence: earnings or other accepted income, supported by documents such as payslips, accounts or tax records.
• Affordability: whether you can meet repayments alongside household bills, childcare, other debts and living costs, including if circumstances change.
• Credit history: your payment record and existing borrowing, rather than a single universal credit-score threshold.
• Deposit and property: the amount and source of your deposit, the property’s value and whether it meets the lender’s requirements.

MoneyHelper’s mortgage application guide explains the checks and supporting documents. Our guides to affordability and credit scores cover these topics in more detail. Deposit requirements are explained in question 6.

3. How do you apply for a mortgage in the UK?

Start with your budget and research local property prices. You can approach a lender directly or use a mortgage broker.

An agreement in principle (AIP), also called a decision in principle (DIP), indicates what a lender might lend based on preliminary information. It is not a binding mortgage offer or a guarantee of approval.

For the full application, the lender checks your supporting documents, assesses your finances and arranges a property valuation. It may ask for more evidence before deciding whether to issue an offer. The sequence and requirements vary by lender and purchase.

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

Mortgage types describe different features: how you use the property, how you repay the debt and how interest is charged. One mortgage can combine several of these features.

Property use: residential, buy-to-let and holiday let

A residential mortgage finances a home you intend to live in. A buy-to-let mortgage is designed for a property rented to tenants. Short holiday stays need lending terms that specifically allow holiday letting; listing a property on a booking website does not establish permission.

Rental mortgages commonly require larger deposits than residential mortgages. Expected rent is an important part of the assessment, but lenders may also require personal income and apply other affordability criteria. These requirements differ between lenders and products.

If you already have a residential mortgage, get the lender’s permission before letting the property. It may allow consent to let subject to conditions or require a suitable replacement mortgage. Letting without permission can breach your agreement; charges and other consequences depend on its terms.

Repayment versus interest-only

With a repayment mortgage, each scheduled payment covers interest and some of the capital borrowed. Keeping to the agreed repayment schedule clears the loan by the end of its term.

With an interest-only mortgage, regular payments cover interest without reducing the capital. The capital remains due at the end, so you need a credible repayment plan accepted by the lender. Lower monthly payments do not remove that debt or the risk of a shortfall. MoneyHelper’s repayment options guide explains the difference.

Interest rates: fixed, tracker and standard variable

A fixed rate stays unchanged for the agreed deal period, helping you budget for monthly repayments. Whether it costs more or less than a variable deal depends on the offers being compared. When the fix ends, a different rate applies under the mortgage terms unless you arrange another deal.

A tracker follows a specified benchmark, usually Bank Rate, with a contractual margin and any applicable floor. A standard variable rate (SVR) is set by the lender and does not have to move in step with Bank Rate.

Early repayment charges and overpayment allowances depend on the product. Check your offer before overpaying, switching or repaying early; there is no universal 10% allowance. For more detail, see MoneyHelper’s mortgage interest rate guide and our fixed versus variable rate comparison.

5. What determines mortgage interest rates in the UK?

There is no single rate available to every borrower. Pricing reflects the lender, property use, credit history, deal length and loan-to-value ratio (LTV), alongside funding costs and market conditions.

Bank Rate is not a minimum price for every mortgage. Fixed deals reflect market expectations and funding costs over their deal period, so they are not simply today’s Bank Rate plus a margin. The Bank of England’s March 2026 Financial Policy Committee record identifies swap rates as a benchmark for fixed-mortgage pricing.

Compare personalised illustrations using the same loan amount and term. Look at fees, monthly payments and total cost over the period you expect to keep the deal, as well as the rate that follows it. A lower headline rate with a substantial fee may cost more overall. Calculators can help you estimate payments; they cannot confirm eligibility or reserve a rate.

6. How much deposit do you need for a mortgage?

For a standard home purchase, 5% or 10% is a common starting point, but some borrowers and properties need more. A larger deposit reduces the amount borrowed and may widen your choice of deals. It does not guarantee approval or a particular rate. See our guide to property deposits.

Limited specialist options can accept less than 5%, or no deposit, subject to strict criteria. These may include a proven rent-payment record, restrictions on previous homeownership and property or location limits. Availability changes, and such products are not an option for every buyer.

Keep money aside for legal fees, surveys, moving costs and any applicable property purchase tax. Our guide to additional homebuying costs helps you budget beyond the deposit.

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

Allow for weeks rather than relying on a same-day decision. MoneyHelper describes a typical application timescale of two to six weeks, but this is not a deadline or guarantee. Missing documents, complex income or valuation queries can extend it.

A mortgage offer is separate from completion of the purchase. Legal checks, searches, other transactions in a chain and the release of funds also affect when you get the keys. Conveyancing follows different legal procedures across the UK; in Scotland, the contract is formed through conclusion of missives. Ask your solicitor about the stages that apply to your purchase and read our guide to homebuying timescales.

8. Is it worth using a mortgage adviser?

An adviser can compare suitable products, explain lender criteria and help prepare and follow up your application. This can be useful if your income, credit history or property is less straightforward. The lender still makes the lending decision, and an adviser cannot guarantee approval or a completion date.

Check which lenders and products the adviser covers and how they are paid. Even a whole-of-market service may exclude some direct-only deals. Ask about broker fees, when they become payable and any lender commission before proceeding. MoneyHelper’s guide to choosing a mortgage adviser sets out the questions to ask.

To discuss your plans with Extend Finance, request an initial consultation or call 02476 997 826. The initial consultation is free and without obligation; ask about any fees for further mortgage advice or arranging a mortgage.