Mortgage Calculator UK – Expert Guide to Repayments, Stamp Duty, Affordability & Overpayments
This advanced UK Mortgage Calculator is designed for buyers, remortgagers, landlords and portfolio investors who want to understand the full picture of mortgage repayments, Stamp Duty Land Tax (SDLT), loan-to-value (LTV), affordability, and the long-term effect of overpayments.
Unlike basic repayment tools, this calculator models UK-specific mortgage rules, interest behaviour, underwriting constraints, and FCA/PRA guidelines, making it suitable for detailed pre-approval planning or for comparing multiple mortgage scenarios before speaking with a broker or lender.
1. UK Mortgage Basics Explained
A mortgage in the UK is a secured loan used to purchase property. The lender holds a charge against the property, and monthly repayments include interest and—if using a repayment mortgage—capital repayment. Interest-only mortgages are still used in buy-to-let (BTL) and specialist lending, but far less common for residential loans unless backed by a credible repayment vehicle.
1.1 Capital & Interest (Repayment)
A repayment mortgage reduces the balance each month. By the end of the term, the loan is fully cleared. Monthly payments stay roughly the same (unless on a tracker or SVR), but the proportion of interest decreases over time.
1.2 Interest-Only Mortgages
With interest-only, you pay just the interest each month. The balance never reduces, so you must have a repayment strategy—such as investments, sale of property, or pension lump sum. Most residential lenders require strict affordability proof for interest-only, while BTL lenders use rental stress tests instead.
1.3 UK Mortgage Amortisation Formula
The calculator uses the industry-standard amortisation formula:
Where P is the loan amount, r the monthly interest rate (annual ÷ 12), and n the total number of monthly payments. This determines the fixed monthly repayment on a capital & interest mortgage.
2. Understanding LTV (Loan-to-Value)
LTV is the loan amount divided by property value. It determines interest rates, product availability, and affordability assessments.
| LTV Band | Typical Borrower | Risk Level |
|---|---|---|
| 60% or below | Remortgagers, high-equity buyers | Very low |
| 75% | Standard home movers | Low/Moderate |
| 85% – 90% | Most first-time buyers | Moderate/High |
| 95% | Small deposit buyers | High |
A lower LTV generally means cheaper interest rates, better product choice and reduced underwriting friction.
3. Stamp Duty (England & Northern Ireland)
SDLT applies when buying residential property in England or NI. The rate depends on buyer type and property price.
3.1 Standard Home Movers SDLT Table
| Band | Rate |
|---|---|
| £0 – £125,000 | 0% |
| £125,001 – £250,000 | 2% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1.5m | 10% |
| £1.5m+ | 12% |
3.2 First-Time Buyer Relief
First-time buyers pay £0 SDLT up to £300,000 and 5% on the portion from £300,000 to £500,000. Relief does not apply above £500,000.
3.3 Additional Property / Buy-to-Let
These purchases incur a 3% surcharge on top of standard SDLT rates.
| Band | Rate |
|---|---|
| £0 – £125,000 | 3% |
| £125,001 – £250,000 | 5% |
| £250,001 – £925,000 | 8% |
| £925,001 – £1.5m | 13% |
| £1.5m+ | 15% |
4. UK Mortgage Affordability Rules (Expert Level)
Under UK FCA rules, lenders must assess affordability by checking income, expenditure, credit profile, commitments and future financial resilience. They often apply a “stress rate” to ensure affordability if rates rise.
4.1 FCA Affordability Principles
- Income must comfortably exceed essential spending.
- Committed expenditure (loans, car finance, credit cards) reduces affordability.
- Household bills and lifestyle costs are modelled using ONS benchmarks.
- Lenders must assess “future rate rises” (stress testing).
4.2 Typical Stress Rates
Although stress tests vary, residential mortgages are commonly tested at: product rate + 3% or a minimum of 6% – 8%
| Product Rate | Approx Stress Rate |
|---|---|
| 4% | 7% |
| 5% | 8% |
| 6% | 9% |
The calculator’s monthly repayment outputs help you anticipate these stress-tested scenarios.
4.3 Income Multipliers
Most lenders cap borrowing at around:
- 4.0× income (standard)
- 4.5× income (typical)
- 5.0 – 5.5× income (for high earners or professionals)
Your actual affordability may be lower once expenses are accounted for.
5. Buy-to-Let (BTL) Stress Tests & DSCR
BTL mortgages rely on rental income rather than personal affordability. Lenders assess:
- Rental income vs mortgage payments
- Interest-only basis
- Stress rate (usually 5% – 7%)
- Coverage ratio (DSCR)
5.1 DSCR Formula
5.2 Typical DSCR Requirements
| Borrower Type | Required DSCR |
|---|---|
| Standard Individual | 125% – 145% |
| Higher-Rate Taxpayer | 145% – 165% |
| Portfolio Landlord | 155% – 175% |
Portfolio landlords may also undergo a full “portfolio check”, assessing the profitability and LTV of all properties.
6. Mortgage Fees & Upfront Costs
Total initial costs go beyond just deposit and SDLT. Buyers should also plan for:
- Mortgage arrangement fees (£0 – £2,000)
- Valuation fees (£0 – £800)
- Solicitor and conveyancing costs (£800 – £2,500)
- Search fees
- Survey (HomeBuyer or full structural)
- Broker fees (optional)
The calculator’s Stamp Duty & Upfront Costs tab provides a consolidated estimate.
7. Overpayments: How Much You Can Save
Overpayments reduce the balance quicker, cutting interest and shortening the term. Even small overpayments make a big difference.
7.1 Overpayment Example
| Scenario | Standard | With £200/mo Overpayment |
|---|---|---|
| Monthly Payment | £1,500 | £1,700 |
| Total Interest | £185,000 | £134,000 |
| Mortgage Term | 25 years | 18 years 9 months |
| Interest Saved | – | £51,000 |
The Overpayment tab in the calculator models this using month-by-month amortisation.
8. Remortgaging & Product Transfers
As fixed-rate deals end (usually 2, 3 or 5 years), borrowers often remortgage to avoid moving onto a lender’s SVR. Remortgaging may allow:
- Lower interest rates
- Debt consolidation
- Borrowing extra for home improvements
- Switching to a shorter term
- Moving to an interest-only part-and-part structure
9. Risks & Considerations
Mortgage borrowing is long term and highly sensitive to interest rates. Key risks include:
- Payment shock when fixed rates end
- Falling property values increasing LTV
- Stress test failures when remortgaging
- Affordability impacts from inflation
- Lettings void periods for landlords
Always seek professional advice when dealing with complex mortgage decisions.
10. UK Mortgage Glossary (Advanced)
- APRC: Provides a standardised measure of total borrowing cost.
- SVR: Lender’s base rate, usually expensive.
- Part-and-Part: Combination of repayment and interest-only.
- MCOB Rules: FCA guidelines governing responsible lending.
- Stress Rate: Interest rate used to test affordability.
- DSCR: Rental coverage ratio for BTL.
- Portfolio Landlord: Anyone owning four or more mortgaged BTL properties.
UK Mortgage FAQs
Frequently Asked Questions
Advanced questions about UK mortgage rules, Stamp Duty and lender affordability.
Lenders use income, committed expenditure, credit profile and ONS-based household spending models. They also apply a stress rate—typically product rate + 3% or a floor of 6%–8%.
Lenders offer the best rates below 60% LTV. Anything below 75% is considered strong and unlocks better product ranges.
Most fixed-rate mortgages allow up to 10% overpayment of the outstanding balance per year without an early repayment charge (ERC). Always check your mortgage offer.
First-time buyers pay £0 SDLT up to £300,000 and 5% on the portion from £300,000–£500,000. No relief applies above £500,000.
Most BTL lenders test at 5%–7% interest with DSCR requirements of 125%–175% depending on tax status and borrower type.