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Mortgage Calculator UK
Home Price - £
Deposit - £
Mortgage Amount - £
Interest Rate - %
Term - Years
Calculate

Full Monthly Payment

£1,279.52

Interest Only

£320.00

Months

216

Total Interest Payable

£36,375.46

Total Loan Payments

£276,375.46

Total Cost

£296,375.46
Share Your 18.000-Year £240000.00 1.6% APR Loan Calculation

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Yearly Capital & Interest Payment Breakdown
Year Interest Paid Capital Paid Mortgage Balance
1£3,755.19£11,599.01£228,400.99
2£3,568.24£11,785.96£216,615.04
3£3,378.27£11,975.92£204,639.12
4£3,185.24£12,168.95£192,470.17
5£2,989.11£12,365.08£180,105.08
6£2,789.81£12,564.38£167,540.70
7£2,587.30£12,766.89£154,773.81
8£2,381.52£12,972.67£141,801.14
9£2,172.43£13,181.76£128,619.38
10£1,959.97£13,394.22£115,225.15
11£1,744.08£13,610.11£101,615.04
12£1,524.72£13,829.47£87,785.57
13£1,301.82£14,052.38£73,733.19
14£1,075.32£14,278.87£59,454.32
15£845.18£14,509.02£44,945.31
16£611.32£14,742.87£30,202.44
17£373.70£14,980.49£15,221.95
18£132.25£15,221.95£-0.00
Monthly Capital & Interest Payment Breakdown
Month Interest Paid Capital Paid Mortgage Balance
1£320.00£959.52£239,040.48
2£318.72£960.80£238,079.69
3£317.44£962.08£237,117.61
4£316.16£963.36£236,154.25
5£314.87£964.64£235,189.61
6£313.59£965.93£234,223.68
7£312.30£967.22£233,256.46
8£311.01£968.51£232,287.95
9£309.72£969.80£231,318.16
10£308.42£971.09£230,347.06
11£307.13£972.39£229,374.68
12£305.83£973.68£228,400.99
13£304.53£974.98£227,426.01
14£303.23£976.28£226,449.73
15£301.93£977.58£225,472.15
16£300.63£978.89£224,493.26
17£299.32£980.19£223,513.07
18£298.02£981.50£222,531.57
19£296.71£982.81£221,548.76
20£295.40£984.12£220,564.65
21£294.09£985.43£219,579.22
22£292.77£986.74£218,592.47
23£291.46£988.06£217,604.41
24£290.14£989.38£216,615.04
25£288.82£990.70£215,624.34
26£287.50£992.02£214,632.32
27£286.18£993.34£213,638.98
28£284.85£994.66£212,644.32
29£283.53£995.99£211,648.33
30£282.20£997.32£210,651.01
31£280.87£998.65£209,652.36
32£279.54£999.98£208,652.38
33£278.20£1,001.31£207,651.07
34£276.87£1,002.65£206,648.42
35£275.53£1,003.98£205,644.44
36£274.19£1,005.32£204,639.12
37£272.85£1,006.66£203,632.45
38£271.51£1,008.01£202,624.45
39£270.17£1,009.35£201,615.10
40£268.82£1,010.70£200,604.40
41£267.47£1,012.04£199,592.36
42£266.12£1,013.39£198,578.96
43£264.77£1,014.74£197,564.22
44£263.42£1,016.10£196,548.12
45£262.06£1,017.45£195,530.67
46£260.71£1,018.81£194,511.86
47£259.35£1,020.17£193,491.70
48£257.99£1,021.53£192,470.17
49£256.63£1,022.89£191,447.28
50£255.26£1,024.25£190,423.03
51£253.90£1,025.62£189,397.41
52£252.53£1,026.99£188,370.42
53£251.16£1,028.36£187,342.07
54£249.79£1,029.73£186,312.34
55£248.42£1,031.10£185,281.24
56£247.04£1,032.47£184,248.77
57£245.67£1,033.85£183,214.91
58£244.29£1,035.23£182,179.69
59£242.91£1,036.61£181,143.08
60£241.52£1,037.99£180,105.08
61£240.14£1,039.38£179,065.71
62£238.75£1,040.76£178,024.95
63£237.37£1,042.15£176,982.80
64£235.98£1,043.54£175,939.26
65£234.59£1,044.93£174,894.33
66£233.19£1,046.32£173,848.00
67£231.80£1,047.72£172,800.29
68£230.40£1,049.12£171,751.17
69£229.00£1,050.51£170,700.66
70£227.60£1,051.92£169,648.74
71£226.20£1,053.32£168,595.42
72£224.79£1,054.72£167,540.70
73£223.39£1,056.13£166,484.57
74£221.98£1,057.54£165,427.04
75£220.57£1,058.95£164,368.09
76£219.16£1,060.36£163,307.73
77£217.74£1,061.77£162,245.96
78£216.33£1,063.19£161,182.77
79£214.91£1,064.61£160,118.16
80£213.49£1,066.03£159,052.14
81£212.07£1,067.45£157,984.69
82£210.65£1,068.87£156,915.82
83£209.22£1,070.29£155,845.53
84£207.79£1,071.72£154,773.81
85£206.37£1,073.15£153,700.66
86£204.93£1,074.58£152,626.07
87£203.50£1,076.01£151,550.06
88£202.07£1,077.45£150,472.61
89£200.63£1,078.89£149,393.72
90£199.19£1,080.32£148,313.40
91£197.75£1,081.76£147,231.63
92£196.31£1,083.21£146,148.43
93£194.86£1,084.65£145,063.78
94£193.42£1,086.10£143,977.68
95£191.97£1,087.55£142,890.13
96£190.52£1,089.00£141,801.14
97£189.07£1,090.45£140,710.69
98£187.61£1,091.90£139,618.79
99£186.16£1,093.36£138,525.43
100£184.70£1,094.82£137,430.61
101£183.24£1,096.28£136,334.34
102£181.78£1,097.74£135,236.60
103£180.32£1,099.20£134,137.40
104£178.85£1,100.67£133,036.74
105£177.38£1,102.13£131,934.60
106£175.91£1,103.60£130,831.00
107£174.44£1,105.07£129,725.92
108£172.97£1,106.55£128,619.38
109£171.49£1,108.02£127,511.35
110£170.02£1,109.50£126,401.85
111£168.54£1,110.98£125,290.87
112£167.05£1,112.46£124,178.41
113£165.57£1,113.94£123,064.46
114£164.09£1,115.43£121,949.03
115£162.60£1,116.92£120,832.12
116£161.11£1,118.41£119,713.71
117£159.62£1,119.90£118,593.81
118£158.13£1,121.39£117,472.42
119£156.63£1,122.89£116,349.54
120£155.13£1,124.38£115,225.15
121£153.63£1,125.88£114,099.27
122£152.13£1,127.38£112,971.89
123£150.63£1,128.89£111,843.00
124£149.12£1,130.39£110,712.61
125£147.62£1,131.90£109,580.71
126£146.11£1,133.41£108,447.30
127£144.60£1,134.92£107,312.38
128£143.08£1,136.43£106,175.95
129£141.57£1,137.95£105,038.00
130£140.05£1,139.47£103,898.53
131£138.53£1,140.98£102,757.55
132£137.01£1,142.51£101,615.04
133£135.49£1,144.03£100,471.02
134£133.96£1,145.55£99,325.46
135£132.43£1,147.08£98,178.38
136£130.90£1,148.61£97,029.77
137£129.37£1,150.14£95,879.62
138£127.84£1,151.68£94,727.95
139£126.30£1,153.21£93,574.74
140£124.77£1,154.75£92,419.99
141£123.23£1,156.29£91,263.70
142£121.68£1,157.83£90,105.87
143£120.14£1,159.37£88,946.49
144£118.60£1,160.92£87,785.57
145£117.05£1,162.47£86,623.10
146£115.50£1,164.02£85,459.08
147£113.95£1,165.57£84,293.51
148£112.39£1,167.12£83,126.39
149£110.84£1,168.68£81,957.71
150£109.28£1,170.24£80,787.47
151£107.72£1,171.80£79,615.67
152£106.15£1,173.36£78,442.31
153£104.59£1,174.93£77,267.38
154£103.02£1,176.49£76,090.89
155£101.45£1,178.06£74,912.83
156£99.88£1,179.63£73,733.19
157£98.31£1,181.21£72,551.99
158£96.74£1,182.78£71,369.21
159£95.16£1,184.36£70,184.85
160£93.58£1,185.94£68,998.92
161£92.00£1,187.52£67,811.40
162£90.42£1,189.10£66,622.30
163£88.83£1,190.69£65,431.61
164£87.24£1,192.27£64,239.34
165£85.65£1,193.86£63,045.47
166£84.06£1,195.46£61,850.02
167£82.47£1,197.05£60,652.97
168£80.87£1,198.65£59,454.32
169£79.27£1,200.24£58,254.08
170£77.67£1,201.84£57,052.24
171£76.07£1,203.45£55,848.79
172£74.47£1,205.05£54,643.74
173£72.86£1,206.66£53,437.08
174£71.25£1,208.27£52,228.81
175£69.64£1,209.88£51,018.94
176£68.03£1,211.49£49,807.45
177£66.41£1,213.11£48,594.34
178£64.79£1,214.72£47,379.62
179£63.17£1,216.34£46,163.27
180£61.55£1,217.96£44,945.31
181£59.93£1,219.59£43,725.72
182£58.30£1,221.22£42,504.50
183£56.67£1,222.84£41,281.66
184£55.04£1,224.47£40,057.19
185£53.41£1,226.11£38,831.08
186£51.77£1,227.74£37,603.34
187£50.14£1,229.38£36,373.96
188£48.50£1,231.02£35,142.94
189£46.86£1,232.66£33,910.29
190£45.21£1,234.30£32,675.98
191£43.57£1,235.95£31,440.03
192£41.92£1,237.60£30,202.44
193£40.27£1,239.25£28,963.19
194£38.62£1,240.90£27,722.29
195£36.96£1,242.55£26,479.74
196£35.31£1,244.21£25,235.53
197£33.65£1,245.87£23,989.66
198£31.99£1,247.53£22,742.13
199£30.32£1,249.19£21,492.94
200£28.66£1,250.86£20,242.08
201£26.99£1,252.53£18,989.55
202£25.32£1,254.20£17,735.36
203£23.65£1,255.87£16,479.49
204£21.97£1,257.54£15,221.95
205£20.30£1,259.22£13,962.73
206£18.62£1,260.90£12,701.83
207£16.94£1,262.58£11,439.25
208£15.25£1,264.26£10,174.98
209£13.57£1,265.95£8,909.03
210£11.88£1,267.64£7,641.40
211£10.19£1,269.33£6,372.07
212£8.50£1,271.02£5,101.05
213£6.80£1,272.71£3,828.33
214£5.10£1,274.41£2,553.92
215£3.41£1,276.11£1,277.81
216£1.70£1,277.81£-0.00

An Introduction to the UK Mortgage Market

How Big is the UK Mortgage Market?

Historically across the United Kingdom, around 65 thousand to 70 thousand mortgages are approved each month. This is from a low of around 30 thousand after the 2008 to 2009 global financial crisis. Prior to the recession, the monthly rate was closer to 80 thousand to 130 thousand mortgages completed each month.

The UK Mortgage Market is Over £1.5 Trillion

In the fourth quarter of 2020, there were £76.5 billion new mortgage originations in the UK, according to the Financial Conduct Authority (FCA). At the end of the fourth quarter of 2020, there were £1,438.4 billion in unsecuritised home loans outstanding, with £102.956 billion in securitised home loans. Total residential mortgages to individuals summed of £1.541 trillion across 13,404,487 loans in the fourth quarter of 2020.

 

Overall mortgage debt tends to grow around 3% to 6% per annum, though there can be significant fluctuations in that rate of growth due to factors like BREXIT, the global economic crisis which happened in 2008, COVID-19 lockdowns, etc. Segments of the market can change faster than the overall market due to those same sorts of factors along with various legal changes tied to foreign property ownership, the localised balance between immigration and construction, etc.

Market Composition

In the fourth quarter of 2020, 75.8% of gross advances were made for home purchases, while 18.45% of the market was for remortgages. Future advances and the other category round out the market at about 3% each. Breaking down the home purchase figures further, 23.32% were loans to first-time homebuyers, 11.15% were for buy-to-let mortgages, and 39.60% was classified as other.

Looking at new commitments, 71.81% were for home purchases, while 23.59% were for remortgages. The other category, including further advances, comprised 4.60% of new commitments.

Over the past couple of years, 76% to 78% of advances were for capital and interest repayment loans. Meanwhile, 17% to 20% were for interest-only payment loans, and 4% to 6% were structured as combined or other. Regulated loans tend to lean much more heavily toward the capital and interest repayment structure, while non-regulated loans are far more likely to be structured as interest-only deals.

In 2020, when the COVID-19 crisis swept across the globe, economies were forced to slow down. In response, central banks intervened to reduce interest rates and further add liquidity to the market. When interest rates fall, the composition of the United States housing market tends to shift heavily toward refinancing (remortgaging). This is because fixed-rate mortgages in the U.S. are locked for the entire duration of the loan term.

In contrast, the UK market share between purchase and remortgages is much more stable, as fixed-rate mortgages adjust with market conditions after the introductory period. Over the past 3 years, remortgaging has made up between 27.49% to 37.83% of the UK market. The peak came in the second quarter of 2020, after interest rates cratered in response to the COVID-19 crisis. In the fourth quarter of 2020, 18.45% of residential loans to individuals were remortgages.

Fixed & Variable Rates

The standard variable rate (SVR) is the basic interest rate lenders use for mortgages. Each lender sets their default SVR. It’s the default rate mortgages revert to after the introductory period of a loan, which is usually 2 to 5 years. SVR mortgages usually have higher interest rates than other mortgage options.

Standard variable rates move based on fluctuations in the Bank of England base rate. When rates reset higher, borrowers must be prepared to make higher monthly payments. To avoid reverting to the SVR, borrowers would remortgage to a new deal with a favourable rate.

In recent years, standard variable rates have been on the rise. Because of this, many consumers find fixed-rate mortgage options more attractive. According to the Bank of England, since 2016, fixed-rate options are more preferred by borrowers, especially first-time homebuyers.

In the third quarter of 2020, 91.2% of all mortgages used fixed-rate loans. The average fixed-rate mortgage was priced at 1.91%. In contrast, the average variable rate mortgage was priced at 1.85%, bringing the overall market average to 1.91%.

What is a “Fixed” Rate?

The phrase “fixed rates” has a different meaning depending on the real estate market. In most markets around the world, mortgages are usually variable rate loans. Variable rate mortgages are only fixed for a limited period of time at the beginning of the loan term.

The only major exception to this rule of thumb is the United States market. In the U.S., the federal government heavily subsidises the housing market through GSEs, Fannie Mae and Freddie Mac. U.S. homebuyers have the ability to lock in a fixed rate for up to 30 years. The U.S. government backs Fannie Mae and Freddie Mac purchases of mortgage securities. With strong government-backing, over 90% of U.S. borrowers opt for fixed-rate loans.

 

The UK government provides subsidy programs in Help to Buy and Help to Buy London. These government schemes offer mortgage deposit assistance. However, few lenders in the UK provide loans which have fixed rates extending beyond 5 years.

Red Bus in front of the Bank of England.

Which Loans Structures Do Most Buyers Prefer?

Most lenders across the UK will guarantee fixed rates for 2 to 5 years. They structure the remaining loan term with a floating variable rate, which tracks the base rate from the Bank of England. The initial fixed-rate period of the loan often comes at a deal rate which has a lower spread. If market rates move higher when rates reset, it can cause a large increase in monthly payments.

For example, if one owed £180,000 and their rate went from 2.29% to 3.29%, an interest-only payment would jump from £343.50 to £493.50. Meanwhile, a full monthly payment would jump from £788.61 to £880.98.

 

1

About 92% of borrowers opt for fixed rate mortgages in the UK.

2

58% of borrowers choose a 2-year deal period, while 32% opt for a 5-year deal period.

3

Only 1 in 50 mortgages come with a fixed rate longer than 5 years.

4

Many loans with a longer fixed period come with significantly higher rates, and onerous early repayment charges.

 

Unsure how your payments may change as rates rise and fall? We provide a UK mortgage amortisation calculator. This allows you to see how changing rates can impact your monthly payments. You can compare interest-only payments and fixed-rate loans side by side. It also generates a printable amortisation schedule of your monthly mortgage payments.

During the introductory period, some banks may limit how much of the loan you can overpay. Meanwhile, lenders allow higher overpayments after the introductory period, when the rate has reverted to the standard variable rate (SVR).

Many borrowers across the UK remortgage their loans when rates reset. This is a big part of why remortgages were nearly 40% of new commitments in 2020. In response to the COVID-19 crisis, when the Bank of England dropped its base rate to 0.1% in March 2020, it helped stimulate market activity and growth. To date, it’s the lowest base rate in the Bank of England’s 325-year history.

A lot of mortgages contain upfront fees that help cover administrative expenses and the cost of offering lower rates. Some loan terms also prohibit borrowers from making advanced payments, particularly in the introductory fixed-rate period.

Loan Deposit and Credit Records

Most borrowers that qualify for financing save substantial funds for deposit. They also have a good credit history showing on-time payments without large outstanding balances. In the fourth quarter of 2020, only 0.37% of mortgages from borrowers with impaired credit history were approved by lenders.

What is Loan-to-value Ratio?

1

LTV stands for loan-to-value. It’s a ratio that compares the size of the loan against the value of the dwelling.

2

For example, if you saved a £50,000 deposit for a £200,000 home, your loan amount would be £150,000. To calculate the LTV ratio, divide £150,000 by £200,000. In this example, the LTV ratio is 75%.

3

In the fourth quarter of 2020, a tiny 0.16% of gross advances went to loans with an LTV over 95%. Meanwhile, 1.06% went to loans with an LTV between 90% and 95%. An estimated 38.76% of advances were granted to loans between 75% and 90% LTV, while 60.02% of gross advances went to loans with an LTV below 75%.

4

Lenders prefer to extend credit to borrowers with relatively low LTV values. If a borrower obtained funding at 100% LTV, any weakness in the local property market could expose the lender to outright potential losses. For this reason, borrowers in the highest LTV quartile may pay 1% APR higher than borrowers in the lower half of the market.

 

Mortgage Affordability

Baseline Limit

As a baseline, most lenders typically do not lend more than 4.5 times the borrower’s annual income. For example, if you make £50,000 a year, a lender might be willing to grant a loan amount between £150,000 and £225,000. For joint applicants, the limit is usually slightly lower. A lender might offer a full multiple on the first income and then add the second income, or they lower the multiplier across incomes down to 3. Examples are shown in the table below:

Income 1Income 2MultipleAmount
£50,000£04.5x£225,000
£30,000£20,0003x both£150,000
£30,000£20,0003x first plus second£110,000

In rare cases, lenders may loan up to 5 times the borrower’s annual salary. However, regulatory restrictions limit banks to having no more than 15% of their mortgage loans above the 4.5x multiple. In these cases, lenders can be selective and only choose borrowers with low debt loads that can afford a substantial deposit.

Moreover, lenders review a borrower’s debt load and monthly outgoings. This presumes borrowers spend about 3% to 5% of their debt amount on monthly debt service payments when lenders perform calculations.

Use our mortgage affordability qualification calculator to estimate how much you can qualify for based on your current income.

General Affordability Assessment Considerations

Each lender considers their own criteria in determining the loan amount for a particular borrower. Different factors play a major role in how much they are willing to lend. These factors include your credit score and history, as well as the stability of your income. They also assess your monthly debt service obligations together with your personal living costs.

Some lenders may focus on your monthly debt service payments and carefully assess your total debt load. A lender may reduce the amount they are willing to offer based on the size of your outstanding debt. Furthermore, if the lender knows you’re expecting a baby in the family, or if you’re taking a career break soon, they may limit their loan offer.

How Much Can I Borrow? Detailed Considerations:

The Impact of COVID-19 On the Property Market

In 2020, the COVID-19 pandemic affected every sector of the economy all over the world. The UK Government published a guide on home moving during the coronavirus outbreak.

In October 6, 2020, Prime Minister Boris Johnson announced a 5% mortgage deposit scheme for first-time home owners. With 5% deposit guaranteed by the government, borrowers can access more mortgage products. This provides options for those who cannot not afford a 10% deposit.

The Bank of England (BoE) cut their interest rate to 0.1% as early as March 19, 2020. In spite of the BoE easing policy, many banks have tightened lending standards.

During lockdowns, far fewer homes were sold across the UK. This led to record sales from pent up demand after the initial lockdown ended.

Property website Rightmove, which says it is used by 90% of British estate agents, reported the highest number of home sales agreed since it began tracking the data more than 10 years ago, with transactions more than 20% higher than the previous record.

The above jump in demand was before the UK government announced a stamp duty holiday in July 2020. After the stamp duty holiday was announced, the property market grew hotter with home prices rising 3.7% in August 2020. Property prices have risen more in areas outside of greater London as many people who formerly worked in the city now have the ability to work from home. They sought more home space with lower living costs. The Fair Oaks, Hampshire and Formby, Merseyside markets have been particularly hot.

The stamp duty holiday was originally scheduled until March 31, 2021. But later on, Chancellor Rishi Sunak officially announced that stamp duty holiday is extended until June 30, 2021.

You can calculate stamp duty across the UK using the government’s free online tool.

Stamp Duty Holiday

During stamp the stamp duty holiday period, the stamp duty tax threshold is raised from £125,000 to £500,000 for property sales throughout England and Northern Ireland. Only homebuyers considering properties above the £500,00 threshold are required to pay stamp duty. The temporary tax break encouraged more prospective buyers to purchase homes.

In 2021, roughly 9 in 10 buyers are expected to pay no stamp duty at all. The average stamp duty bill is anticipated to decline by £4,500.

English & Northern Ireland Stamp Duty Rates

The following table shows freehold home stamp duties an individual or couple would pay when they purchase their primary residence.

LocationProperty ValueOld RateNew Rate
England£100,000£0£0
England£200,000£1,500£0
England£300,000£5,000£0
England£400,000£10,000£0
England£500,000£15,000£0
England£600,000£20,000£5,000
England£700,000£25,000£10,000
England£800,000£30,000£15,000
England£900,000£35,000£20,000
England£1,000,000£43,750£28,750
England£1,100,000£53,750£38,750
England£1,200,000£63,750£48,750
England£1,300,000£73,750£58,750
England£1,400,000£83,750£68,750

The percentage rate breakdown is:

Second home buyers can also avail of the discounted rates, though they will also be required to pay an extra 3% stamp duty.

Prior to the COVID-19 crisis, stamp duty was paid on any land or property sold for above £125,000. First-time buyers got an exemption on property valued up to £300,000.

Scotland Land and Buildings Transaction Tax Rates

Scottish landlords pay an additional 4%.

Wales Land Transaction Tax

Welsh landlords pay an additional 3%.

Buyers across the UK rushed to take advantage of the stamp duty holiday. Mortgage approvals rose in 2020 ahead of the holiday deadline. According to data from the Bank of England, mortgage approval drastically increased especially after the initial lockdown.

That manic surge has been attributed to a number of components, including eager buyers looking to upgrade their homes to better suit their new lifestyles, which now frequently involve more time at home and remote working.

The following graph illustrates the changing mortgage approval levels in 2020. It includes data from February 2020 to January 2021. Before lockdown was lifted in May 2020, UK mortgage approvals reached as low as 9.3 thousand. However, approvals surged to 40.3 thousand in June 2020 as businesses began reopening. Mortgage approvals reached its peak in November 2020 at 104.9 thousand. This gradually decreased to 98.9 thousand by January 2021.

UK Mortgage Approval Stats.

Month & YearNo. of UK Mortgage Approvals
February 202073.1 thousand
March 202056.1 thousand
April 202015.9 thousand
May 20209.3 thousand
June 202040.3 thousand
July 202067.6 thousand
August 202086.1 thousand
September 202092.6 thousand
October 202098.3 thousand
November 2020104.9 thousand
December 2020102.8 thousand
January 202198.9 thousand
Historical Monthly UK Mortgage Approval Statistics

The following table from the Building Societies Association shows historical UK mortgage data going back to January 1999. From 2010 onward the data reflects all UK mutual lenders. Before 2010 the data reflects the UK building society sector. The August 2009 data does not include Britannia data.

Period House Purchase Remortgaging Other Total
Jan 1999 50,434 14,407 26,930 91,771
Feb 1999 78,439 28,524 36,392 143,355
Mar 1999 111,482 40,438 47,717 199,637
Apr 1999 108,234 33,669 41,193 183,096
May 1999 104,691 31,698 38,526 174,915
Jun 1999 119,408 34,294 46,593 200,295
Jul 1999 113,727 33,600 44,688 192,015
Aug 1999 99,052 34,444 42,735 176,231
Sep 1999 100,921 29,399 45,567 175,887
Oct 1999 99,135 31,428 42,472 173,035
Nov 1999 90,985 26,076 43,719 160,780
Dec 1999 67,651 21,928 31,450 121,029
Jan 2000 50,816 22,506 27,673 100,995
Feb 2000 87,861 32,344 38,425 158,630
Mar 2000 118,265 37,838 47,678 203,781
Apr 2000 99,600 33,427 37,105 170,132
May 2000 110,890 39,559 42,645 193,094
Jun 2000 115,175 39,973 55,503 210,651
Jul 2000 98,182 36,042 55,498 189,722
Aug 2000 93,810 36,206 50,260 180,276
Sep 2000 92,961 35,947 45,976 174,884
Oct 2000 92,562 39,214 47,913 179,689
Nov 2000 92,533 43,045 48,826 184,404
Dec 2000 70,702 37,474 41,469 149,645
Jan 2001 66,306 42,715 52,350 161,371
Feb 2001 85,361 49,850 56,583 191,794
Mar 2001 120,429 68,697 70,140 259,266
Apr 2001 108,794 58,821 62,581 230,196
May 2001 128,046 66,717 68,549 263,312
Jun 2001 130,888 66,706 73,230 270,824
Jul 2001 128,170 70,554 73,174 271,898
Aug 2001 118,230 60,255 72,912 251,397
Sep 2001 97,882 55,778 66,764 220,424
Oct 2001 104,043 65,801 77,859 247,703
Nov 2001 99,448 72,152 76,901 248,501
Dec 2001 74,184 63,927 54,722 192,833
Jan 2002 81,940 72,098 68,075 222,113
Feb 2002 108,314 73,083 71,214 252,611
Mar 2002 130,848 76,175 83,401 290,424
Apr 2002 141,604 83,115 90,295 315,014
May 2002 153,080 97,438 100,321 350,839
Jun 2002 120,191 80,099 78,006 278,296
Jul 2002 139,561 94,906 97,354 331,821
Aug 2002 113,903 89,028 93,297 296,228
Sep 2002 113,313 92,396 97,970 303,679
Oct 2002 126,705 106,578 110,229 343,512
Nov 2002 115,388 109,832 102,659 327,879
Dec 2002 80,329 92,715 80,456 253,500
Jan 2003 73,899 91,940 94,888 260,727
Feb 2003 86,255 97,212 104,014 287,481
Mar 2003 107,878 126,257 121,989 356,124
Apr 2003 110,987 132,739 109,845 353,571
May 2003 115,161 115,125 115,478 345,764
Jun 2003 124,018 115,858 122,971 362,847
Jul 2003 133,549 121,018 129,156 383,723
Aug 2003 120,630 110,270 116,395 347,295
Sep 2003 131,134 123,465 125,020 379,619
Oct 2003 137,731 131,176 131,649 400,556
Nov 2003 122,431 117,817 106,169 346,417
Dec 2003 99,009 96,015 85,674 280,698
Jan 2004 83,620 86,969 88,908 259,497
Feb 2004 110,097 101,717 104,720 316,534
Mar 2004 148,673 128,075 123,574 400,322
Apr 2004 131,047 106,883 103,424 341,354
May 2004 132,844 103,878 101,982 338,704
Jun 2004 136,507 118,847 105,376 360,730
Jul 2004 111,711 116,432 102,523 330,666
Aug 2004 93,902 105,430 95,268 294,600
Sep 2004 88,803 103,326 96,568 288,697
Oct 2004 85,758 102,289 79,839 267,886
Nov 2004 74,175 92,371 78,790 245,336
Dec 2004 62,708 79,831 62,053 204,592
Jan 2005 50,854 78,082 66,917 195,853
Feb 2005 73,775 89,630 77,756 241,161
Mar 2005 103,905 105,234 84,032 293,171
Apr 2005 109,552 102,797 86,307 298,656
May 2005 108,051 98,038 82,253 288,342
Jun 2005 116,264 108,635 84,637 309,536
Jul 2005 106,238 108,533 76,623 291,394
Aug 2005 108,360 115,761 82,955 307,076
Sep 2005 108,427 119,698 84,639 312,764
Oct 2005 107,949 117,477 78,915 304,341
Nov 2005 113,898 112,403 79,263 305,564
Dec 2005 88,537 85,282 59,145 232,964
Jan 2006 77,567 81,996 69,027 228,590
Feb 2006 97,161 96,494 72,829 266,484
Mar 2006 142,606 117,695 85,685 345,986
Apr 2006 109,001 88,989 68,018 266,008
May 2006 137,406 104,805 78,971 321,182
Jun 2006 146,854 108,794 84,189 339,837
Jul 2006 125,734 98,525 74,867 299,126
Aug 2006 125,861 99,980 82,514 308,355
Sep 2006 125,078 96,499 78,309 299,886
Oct 2006 129,442 108,850 79,583 317,875
Nov 2006 127,605 115,692 81,620 324,917
Dec 2006 82,886 78,090 54,556 215,532
Jan 2007 80,232 86,974 74,900 242,106
Feb 2007 101,166 107,980 72,944 282,090
Mar 2007 133,194 112,527 81,078 326,799
Apr 2007 110,529 91,654 69,601 271,784
May 2007 136,974 117,774 79,700 334,448
Jun 2007 136,433 109,251 75,191 320,875
Jul 2007 126,176 106,577 74,513 307,266
Aug 2007 114,662 99,835 69,244 283,741
Sep 2007 96,955 100,781 64,945 262,681
Oct 2007 92,506 97,664 64,720 254,890
Nov 2007 80,752 97,046 61,433 239,231
Dec 2007 49,891 76,272 39,388 165,551
Jan 2008 48,706 100,248 53,790 202,744
Feb 2008 63,544 109,532 61,630 234,706
Mar 2008 61,861 95,179 50,918 207,958
Apr 2008 65,023 113,443 52,696 231,162
May 2008 46,711 90,656 45,670 183,037
Jun 2008 41,557 85,249 44,742 171,548
Jul 2008 38,992 76,454 47,141 162,587
Aug 2008 32,075 60,798 37,951 130,824
Sep 2008 34,145 71,047 39,269 144,461
Oct 2008 34,293 79,705 35,650 149,648
Nov 2008 24,752 41,171 29,076 94,999
Dec 2008 22,954 29,017 24,761 76,732
Jan 2009 21,466 26,915 30,357 78,738
Feb 2009 34,597 31,631 31,857 98,085
Mar 2009 47,804 36,073 33,713 117,590
Apr 2009 48,248 32,156 27,881 108,285
May 2009 52,350 31,399 28,079 111,828
Jun 2009 61,611 36,837 32,527 130,975
Jul 2009 63,317 36,810 30,722 130,849
Aug 2009 50,957 24,508 25,268 100,733
Sep 2009 59,218 26,299 30,235 115,752
Oct 2009 58,818 24,653 29,523 112,994
Nov 2009 55,949 24,739 26,865 107,553
Dec 2009 42,628 23,194 20,220 86,042
Jan 2010 29,721 18,941 20,029 68,691
Feb 2010 40,582 27,832 25,697 94,111
Mar 2010 57,897 33,791 30,027 121,715
Apr 2010 53,602 26,540 24,744 104,886
May 2010 53,900 26,022 23,995 103,917
Jun 2010 60,422 30,042 27,512 117,976
Jul 2010 55,433 29,048 25,848 110,329
Aug 2010 47,744 26,083 24,063 97,890
Sep 2010 49,573 29,638 25,361 104,572
Oct 2010 47,647 29,211 23,224 100,082
Nov 2010 47,551 36,323 22,897 106,771
Dec 2010 31,095 25,756 15,237 72,088
Jan 2011 27,319 25,951 17,130 70,400
Feb 2011 40,302 37,670 20,330 98,302
Mar 2011 57,095 39,692 23,701 120,488
Apr 2011 47,138 26,736 18,621 92,495
May 2011 52,450 29,179 21,018 102,647
Jun 2011 59,706 35,178 22,558 117,442
Jul 2011 55,373 32,075 20,886 108,334
Aug 2011 55,564 33,224 22,435 111,223
Sep 2011 54,008 34,313 22,323 110,644
Oct 2011 52,218 33,531 20,949 106,698
Nov 2011 54,644 34,198 21,539 110,381
Dec 2011 37,560 25,501 15,313 78,374
Jan 2012 37,253 26,219 16,982 80,454
Feb 2012 44,968 30,140 19,575 94,683
Mar 2012 58,355 34,358 20,555 113,268
Apr 2012 51,734 29,855 17,082 98,671
May 2012 60,152 30,377 19,143 109,672
Jun 2012 51,890 24,719 16,032 92,641
Jul 2012 53,880 25,906 16,639 96,425
Aug 2012 51,112 25,473 16,471 93,056
Sep 2012 48,860 28,046 15,924 92,830
Oct 2012 57,420 32,126 16,480 106,026
Nov 2012 56,182 31,072 14,969 102,223
Dec 2012 38,062 22,099 10,443 70,604
Jan 2013 37,248 22,575 12,360 72,183
Feb 2013 45,103 27,456 12,602 85,161
Mar 2013 55,510 31,856 13,095 100,461
Apr 2013 61,829 34,170 13,433 109,432
May 2013 68,683 33,744 14,263 116,690
Jun 2013 65,188 31,757 13,355 110,300
Jul 2013 70,221 36,813 14,299 121,333
Aug 2013 64,226 34,279 13,264 111,769
Sep 2013 67,172 35,683 13,041 115,896
Oct 2013 75,815 40,401 14,380 130,596
Nov 2013 71,952 36,345 13,380 121,677
Dec 2013 52,657 28,338 10,218 91,213
Jan 2014 53,687 31,420 12,107 97,214
Feb 2014 60,719 32,840 12,356 105,915
Mar 2014 73,356 36,687 13,134 123,177
Apr 2014 67,068 31,772 11,846 110,686
May 2014 69,277 28,633 9,365 107,275
Jun 2014 77,272 32,197 10,569 120,038
Jul 2014 77,757 36,772 12,057 126,586
Aug 2014 64,137 30,448 9,581 104,166
Sep 2014 64,546 32,164 9,914 106,624
Oct 2014 66,950 35,864 10,203 113,017
Nov 2014 57,897 32,725 9,117 99,739
Dec 2014 46,059 28,554 8,115 82,728
Jan 2015 41,687 26,843 7,933 76,463
Feb 2015 53,841 31,580 9,145 94,566
Mar 2015 70,238 38,339 10,807 119,384
Apr 2015 70,499 36,522 10,900 117,921
May 2015 69,733 35,192 10,988 115,913
Jun 2015 81,112 39,841 12,315 133,268
Jul 2015 82,731 42,761 12,422 137,914
Aug 2015 69,833 39,359 11,805 120,997
Sep 2015 74,149 43,713 13,129 130,991
Oct 2015 74,580 43,720 13,104 131,404
Nov 2015 70,383 41,742 12,414 124,539
Dec 2015 54,819 36,576 10,318 101,713
Jan 2016 49,700 34,301 10,254 94,255
Feb 2016 66,250 41,621 13,099 120,970
Mar 2016 77,609 45,043 14,183 136,835
Apr 2016 72,660 42,985 13,855 129,500
May 2016 74,217 43,488 13,409 131,114
Jun 2016 78,557 46,852 13,737 139,146
Jul 2016 67,727 44,908 13,070 125,705
Aug 2016 64,389 42,418 13,203 120,010
Sep 2016 66,905 45,700 14,447 127,052
Oct 2016 68,175 46,143 13,986 128,304
Nov 2016 71,336 50,807 14,293 136,436
Dec 2016 50,460 40,601 10,693 101,754
Jan 2017 48,505 39,596 12,043 100,144
Feb 2017 61,064 42,296 13,386 116,746
Mar 2017 80,339 50,382 15,820 146,541
Apr 2017 63,293 37,198 12,583 113,074
May 2017 75,135 45,351 14,750 135,236
Jun 2017 78,891 48,712 14,914 142,517
Jul 2017 73,221 48,429 15,664 137,314
Aug 2017 70,491 46,889 14,575 131,955
Sep 2017 66,228 48,050 14,029 128,307
Oct 2017 67,946 56,379 14,603 138,928
Nov 2017 67,872 60,137 14,793 142,802
Dec 2017 43,818 38,344 10,439 92,601
Jan 2018 49,411 43,497 12,152 105,060
Feb 2018 57,019 44,109 13,160 114,288
Mar 2018 67,004 47,318 14,439 128,761
Apr 2018 66,254 46,937 13,404 126,595
May 2018 74,586 53,279 14,239 142,104
Jun 2018 76,455 49,250 15,098 140,803
Jul 2018 72,160 47,952 17,167 137,279
Aug 2018 70,507 53,947 15,419 139,873
Sep 2018 62,852 47,621 14,711 125,184
Oct 2018 73,674 57,038 15,521 146,233
Nov 2018 66,947 54,338 15,189 136,474
Dec 2018 44,510 38,330 9,715 92,555
Jan 2019 49,669 45,125 13,521 108,315
Feb 2019 58,628 46,314 13,794 118,736
Mar 2019 67,911 52,119 15,187 135,217
Apr 2019 67,368 46,907 14,059 128,334
May 2019 75,377 47,517 15,636 138,530
Jun 2019 73,651 45,745 14,670 134,066
Jul 2019 78,065 52,644 15,952 146,661
Aug 2019 67,088 48,470 14,837 130,395
Sep 2019 65,176 49,953 14,880 130,009
Oct 2019 71,721 60,046 15,856 147,623
Nov 2019 65,490 51,795 13,553 130,838
Dec 2019 48,501 41,238 11,021 100,760
Jan 2020 53,586 47,102 12,674 113,362
Feb 2020 66,511 51,176 14,098 131,785
Mar 2020 63,148 47,160 13,122 123,430
Apr 2020 16,418 32,127 6,005 54,550
May 2020 9,922 27,261 5,619 42,802
Jun 2020 47,957 38,064 9,179 95,200
Jul 2020 78,374 39,162 11,656 129,192
Aug 2020 82,115 31,182 11,269 124,566
Sep 2020 96,007 34,236 13,403 143,646
Oct 2020 104,806 37,220 13,587 155,613
Nov 2020 104,053 38,343 12,699 155,095
Dec 2020 78,093 30,071 11,691 119,855
Jan 2021 69,312 27,694 11,303 108,309

Though there is a gradual decrease in house purchases from November 2020 to January 2021, it should not be a cause for alarm. As shown in the above graph from the Bank of England, the surge in mortgage approvals in the middle of the COVID-19 crisis does not demonstrate normal historical market activity and is near the levels seen in the housing bubble peak before the 2008 global financial crisis. The surge was a catch up for demand which could not be satisfied early in lockdowns along with buyers responding to falling interest rates and new needs in a work-from-home economy. A new mortgage guarantee scheme lasting through the end of 2022 provides a guarantee to mortgage lenders across the UK for borrowers who put a 5% deposit on homes up to £600,000.

The decrease should be seen as the beginning of market normalising after the COVID-19 housing boom. Despite the crisis, affected lenders are encouraged by more market activity as they regain confidence in extending credit and central banks have promised loose monetary policies for years to come. When normal housing demand resumes, the mortgage industry should eventually process applications again more inline with regular historical levels seen from the 2014 to 2019 time-frame.

While the above graph breaks down house purchases versus remortgaging activity, the following graph from the Financial Conduct Authority shows a more detailed look at the market composition of home buyers. Falling rates gave buyers with tracking rates less incentive to refinance as their loan already tracks rates lower. Increasing home prices from easy loan conditions and relaxed stamp duties for people buying their primary residence gave buy-to-let investors reason to pause and first-time home-buyers reason to enter the market. Homeowners working from home who needed a larger space and those looking to move away from urban area lockdowns had incentive to move to larger properties in the countryside, causing home movers to spike as well.

UK Mortgage Market Composotion Stats from the FCA.

The High Cost of Quick Decisions

Between 2015 and 2016, nearly one in three UK consumers chose mortgage products which cost them more than £550 per year. They got more expensive options over cheaper alternatives that were readily available and which they also qualified for. This fee difference amounts to 12.7% of what consumers spend annually on their mortgage.

The remortgage market is more competitive amongst lenders than the first-time buyer (FTB) market. So only around 12% in that category opted for strongly dominated product choices. About 18% of first-time buyers fall into the strongly dominated product choice category, and well over 20% of mover mortgages fall in this category. Movers who are in a rush often make emotionally driven or time-sensitive decisions. This compromises their ability to obtain the best deal the way a person who is remortgaging can.

About 14% of borrowers in the top credit score quartile secured strongly dominated products, while more than 20% of consumers in the bottom quartile did not. In general, people who are young, including borrowers with low incomes, low credit scores, and limited funds for deposit are more likely to get an unfavourable mortgage deal. If there are factors that make your transaction more complex, you might find it more challenging to obtain a good loan.

Due to the large price difference between loan products, around 70% of borrowers seek independent intermediaries to help them compare loans. Instead of going directly to a lender, they usually get a broker for help in finding and comparing loans. When comparing loans, it’s best to look at the total loan coast in Annual Percentage Rate (APR) rather than the interest rate in isolation. The former gives you a multidimensional view which incorporates the full cost of financing inclusive of arrangement, valuation and survey fees, along with any other expenses.

How Much Can You Afford to Borrow?

Lenders generally prefer borrowers that offer a significant deposit. They typically request at least 5% deposit based on the value of the property. If a house is valued at £180,000, a lender would expect a £9,000 deposit. In this example, the lender would be willing to offer a loan amount of £171,000. Meanwhile, some lenders may offer first-time buyers a 100% mortgage with a £0 deposit. However, obtaining this sort of deal usually forces a borrower to pay a much higher interest rate on their loan. This is usually one percent higher than a mortgage that requires a deposit. Consider this expensive trade-off before choosing a zero-deposit deal.

If you know the interest rate you’ll be charged on a loan, you can easily use the above calculator to estimate how much home you can afford. For example, at 2.29% APR on a £180,000 home loan, it will require £788.61 of full repayment per month, or £343.50 per month with an interest-only payment. If your maximum monthly budget for a home payment is £1,000 per month, you would then divide this amount by the above payments to get the equivalent loan capital. The example is shown in the table below.

Default Calculation

Loan TypeLoan AmountInterest RateMonthly Payment
Interest-only£180,0002.29% APR£343.50
Fully Amortising£180,0002.29% APR£788.61

New Calculation

Loan TypeInterest-onlyFull Repayment
Monthly Payment£1,000£1,000
Old Monthly Payment£343.50£788.61
Payment Conversion£1,000 / £343.50 = 2.9112£1,000 / £788.61 = 1.2681
Old Loan Amount£180,000£180,000
New Loan Amount£180,000 * 2.9112 = £524,016£180,000 * 1.2681 = £228,258
Home Value at 95% LTV£524,016 / 0.95 = £551,596£228,258 / 0.95 = £240,272
5% Deposit£551,596 – £524,016 = £27,580£240,272 – £228,258 = £12,014

The above calculations consider the capital and interest portion of the mortgage payment, but do not cover other aspects of home ownership. If your property taxes cost £1,200 per year, that would be £100 per month. You would need to subtract that and any other expenses. This includes costs such as insurance or common dwelling fees before calculating the remaining capital and interest portion of your monthly payment.

If you had £200 in other monthly home ownership related fees, then this might take a renter equivalent of £1,000 down to £800.

Also, if you had a different interest rate on the offer, then you would need to use that interest rate in your calculations versus what our calculator shows as a default.

Want to Pay Your Loan Off Quicker?

Houses Made of Pound Sterling.

With strong property prices, it’s not uncommon for people to take out loans extending beyond 25 years. However, with the rise of technology and automation, who knows what the world would look like in a quarter century? Paying extra on your home means your balance is lower today AND your balance is lower tomorrow. The earlier you make mortgage overpayments, the more interest expense you will save.

Making early overpayments reduces your balance for the duration of the loan. Just take note of early repayment charges (ERC). Some lenders allow you to overpay up to a certain amount before prompting early repayment penalty fees. These fees can range between 1% to 5% of your loan amount. Be sure to make qualified overpayments to avoid this extra cost.

Suppose you want to pay off your loan in 15 years. Your original mortgage has with a 25-year term. To estimate the overpayment amount you need to make, adjust the above calculator to 15 years. For example, a £180,000 loan structured over 25 years will see you pay £56,581.78 in interest over the life of the mortgage. However, if you pay off the loan within 15 years, your monthly payment would jump from £788.61 to £1,182.51. See the example in the table below.

Loan Amount: £180,000
Interest Rate: 2.29% APR

Pay-off time25-years15-years
Monthly Payment£788.61£1,182.51
Total Interest Expenses£56,581.78£32,851.43

This example presumes you are able to maintain the same APR when you remortgage. Though your monthly payment increased, your total interest expenses would decrease to £32,851.43. This saves you a total of £23,730.35 over the life of the loan. Consider making overpayments to boost your interest savings.

How Do You Compare Loan Offers?

In any loan scenario, you have to make underlying assumptions such as:

Look Beyond the Monthly Payment

It’s important to consider the overall mortgage costs, not just the monthly payment amount. Borrowers will find interest-only payments affordable. However, compared to a full repayment mortgage, you immediately build equity in your home. This bring you closer to home ownership, stability, and grants you further life flexibility. In contrast, interest-only payments do not build equity. It does not provide financial cushion which helps protect you against shifting market conditions.

If one loan amortises and the other does not, then you have to look at how much equity you build in a home. This is a key factor in determining value. Most people also do not want to pay mortgages for the entire lifetime, or until they hit a tough patch and risk foreclosure.

Example Loan Comparison from a Reader

The key to being able to accurately compare mortgage offers is to only adjust a single variable at a time. This way you can easily see the differences between offers, instead of trying to compare apples to oranges.

So if you know you want a 2-year introductory term on a 12-year amortisation schedule, you can compare all loans on offer that fit those criteria. This allows you to focus on comparing the difference in interest rate and total interest paid against the upfront fee for buying access to a lower rate.

The example below is based on a question from one of our users named Dan.

Useful information on your website. Your calcs suggest that more capital is paid than interest in the first year and going forward. However I have seen sites which suggest the opposite is true and I have to say my recollection was this this was the way it tended to work. What I am trying to work out is when I reduce my term from 20 years to 12 years whether I am better to go with 1.12% or 1.54% 2 year fixed. As the former has a fee involved I am trying to see how much capital I will have reduced over the 2 years to see if while the 1.54 is offer I will have reduced less of the loan when I look for another 2deal in 2 years (i.e. some of the monthly payment will have been paying interest rather than repaying capital borrowed.

Answer: The ratio of interest vs. capital repayment depends on both the interest rate AND the length of the loan.

Example loan scenarios below:

12-Year Fixed £200,000 @ 1.54%, Remortgaging 2 Years In

YearInterestCapitalBalance
1£2,972.36£15,292.37£184,707.63
2£2,735.19£15,529.54£169,178.08
Total£5,707.55£30,821.91£169,178.08

12-Year Fixed £200,000 @ 1.12%, Remortgaging 2 Years In

YearInterestCapitalBalance
1£2,159.78£15,659.74£184,340.26
2£1,983.48£15,836.03£168,504.24
Total£4,133.26£31,495.77£168,504.24

Presuming the loan terms are similar and you will remortgage in a couple of years, the ending balances should be quite similar. In the above examples the loan with a higher interest rate had a £673.84 higher balance. This is one of the two numbers you will need to look at.

What you really have to compare is the interest amount paid if you know you will remortgage in 2 years.

The difference in interest paid is £1,574.29 (£5,707.55 – £4,133.26). Add that amount to the balance difference and you get £2,248.13.

If this amount is more than the upfront fee, then you save money by paying the upfront fee for buying the lower rate.

To run the numbers again, let’s say that upfront gee is £1,200 and you roll it into the loan.

12-Year Fixed £201,200 @ 1.12%, Remortgaging 2 Years In

YearInterestCapitalBalance
1£2,172.73£15,753.69£185,446.31
2£1,995.38£15,931.04£169,515.26
Total£4,168.11£31,684.73£169,515.26

Financing the fee costs more than paying it upfront. But it can still be a viable option if there is a significant interest rate difference relative to the upfront cost. Even if you financed the loan fee, in the above scenario, you still come out ahead when compared against the higher rate.

By rolling the fees into the loan, you pay an extra £34.85 in interest over the first 2 years. Your balance at the end of the first 2 years is £11.02 higher than if you kept your current loan.

Your remaining loan balance being £11.02 higher is certainly worth the £1,539.44 saved on monthly interest payments over the course of those 2 years.

Only Compare a Single Variable at a Time

The trick with comparing loan offers is to decide what you want to keep the same (e.g. loan term). Then only compare loans with one difference at a time so it is easy to make an A vs. B comparison.

If you compare loans with different terms, rates, fees, caps and so on side by side, it can almost be impossible to make the best choice. Too many variables makes it difficult to decide.

A lot of people pick whatever the lower initial monthly payment is without considering how payments may change, what the fees are, etc.

In the above A vs. B example comparison, the fee for buying the lower rate was not rolled into the loan. If you are going to roll that fee into the loan, then you would do that same sort of comparison again. But you run the second calculation using the fee as part of the loan amount.

Projecting the Past Into the Future

We tend to presume the future will be a continuation of the recent past, though the year 2020 has shown this to not be true.

One last note of caution. Since the early 1980s, the world has seen falling interest rates as globalisation and technology have been massive deflationary forces driving down the cost of labour, logistics, and goods. Long-term interest rate cycles in developed economies often last for around 70 to 100 years. We are likely approaching a turning point sometime in the next couple of years. So when you go to remortgage again, rates may be moving higher already.

Central banks have been having interest rates pegged at the lower bound, and some even employ negative interest rates. As fiscal intervention picks up, rates are likely to head higher eventually. In fact, early on in the COVID-19 crisis, the Federal Bank of New York’s Kenneth D. Garbade authored a report on yield curve control measure that were used during and after World War II.

Paying for a longer fixed period can seem like a waste of money so long as interest rates keep falling. But when they start moving in the other direction, rising rates can have a dramatic impact on your monthly budget. You’ll have to get ready for more expensive payments.

I hope this helps you, Dan!

Arrears & Foreclosures

You are obligated to regularly pay your mortgage. If you fall behind on payments, the lender may seize your home.

1.27% of total loans were in arrears at the end of the fourth quarter of 2020.

In the fourth quarter of 2020, lenders took new position of 435 units, while selling off 983 units, leaving an ending stock of 1,933 units.

 

Equity Release Mortgages

Rising longevity coupled with increasing living costs have forced many elderly citizens to use their home equity. They tap it to pay for living costs or pay expenses for their own parents or children. Stamp duty fees and the hassle of moving makes equity release relatively appealing compared to the cost of downsizing.

People aged 55 years old and above use one of two types of loans to leverage on the equity they've built:

Of the two options, the lifetime mortgage option is far more popular with consumers.

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