What is a mortgage
How they work, the main types of deals, and when a broker can save you money. Plain English, no jargon — start here.
The basics
A mortgage is a loan you take out to buy a property. The lender — usually a bank or building society — charges interest on the amount you borrow and you repay it in monthly instalments over a set term, typically 25 to 35 years.
Until the loan is fully repaid, the property is secured against the mortgage. If you stop making payments, the lender can repossess and sell it to recover the debt. That security is the reason mortgage rates are far cheaper than personal loan rates.
Your deposit (the cash portion) sits alongside the mortgage. The larger the deposit, the smaller the loan you need, the lower your loan-to-value (LTV) ratio, and typically the better the interest rate the lender will offer.
Two ways to repay
You repay a mortgage in one of two structures. The choice changes both your monthly cost and what you owe at the end of the term.
01
Repayment
Each monthly payment chips away at both the interest and the capital. By the end of the term, the mortgage is paid off and you own the property outright.
Right for most owner-occupiers.
02
Interest-only
Monthly payments cover only the interest. The capital balance stays the same throughout — you repay it from a separate plan at term end.
Most common on buy-to-let.
Types of deals
Once you've chosen repayment or interest-only, you pick a rate type — how your interest rate behaves over time.
- Fixed-rate
Interest stays the same for a set period — usually 2 to 10 years. Predictable repayments.
- Tracker
Follows the Bank of England base rate plus a set margin. Moves when the base rate changes.
- Discount
A discount on the lender's standard variable rate (SVR) for an initial period.
- Standard variable rate
The lender's default rate after your initial deal ends. Can change at any time.
- Interest-only
Monthly payments cover only the interest. You need a plan to repay the capital at term end.
- Offset
Your savings balance is offset against the mortgage, reducing the interest you pay.
How much can I borrow
Most high-street lenders offer between 4 and 4.5× your annual income, though some specialists go higher for the right applicant. Affordability depends on income, outgoings, credit history, deposit size and the loan term.
Two people on £35k each (£70k total) might typically borrow £280k–£315k. Add a £40k deposit and you're shopping in the £320k–£355k bracket — though the actual figure depends on commitments, dependants, and credit profile.
When does a broker help
A broker has access to lenders the high street doesn't show you and sees hundreds of cases a month — including the awkward ones (self-employed, complex income, bad credit, large mortgages). When the standard route isn't working, that's exactly when broker help pays for itself.
For straightforward cases, a broker still saves you the leg work — they handle the paperwork, deal with the lender, and stay with the case through to completion. There's no fee to chat.
Talk to a real adviser
Mortgages get specific fast. The next step is your situation, your numbers, your circumstances — and that's a conversation. Free, no obligation.