What is a mortgage?
A mortgage is a loan secured against a property, usually your home, that you repay over a long term — commonly 25 to 35 years — with interest charged on the outstanding balance.
Because the loan is secured, the lender can repossess the property if repayments aren't kept up, which is why mortgage rates are generally far lower than unsecured borrowing.
Most UK mortgages are split into an initial deal period, where you get a discounted or fixed rate, followed by the lender's standard variable rate unless you remortgage.
How does comparing mortgages work?
Comparison starts with your deposit, income and the property value, which together determine your loan-to-value (LTV) and the rates you're offered — lower LTV generally means a cheaper rate.
A broker or comparison tool checks your details against lender criteria and shows deals ranked by initial rate, fees and total cost over the deal period, not just the headline number.
Here's a fictional example:
Meet Sam and Priya, buying their first flat together
Sam and Priya have a £30,000 deposit on a £300,000 flat, giving them a 90% LTV mortgage of £270,000.
Comparing deals, they find a five-year fix at 4.79% with a £999 fee beats a slightly cheaper two-year fix once they account for having to remortgage again sooner.
Their monthly payment on a 30-year term comes to around £1,410, and fixing for five years gives them budgeting certainty while they settle into homeownership.
What types of mortgage are there?
Fixed-rate mortgage
The rate stays the same for an agreed period, typically two, five or ten years.
Payments don't move even if the Bank of England base rate rises, which suits budgeting.
Tracker mortgage
The rate moves directly with the Bank of England base rate plus a fixed margin.
Payments fall when the base rate falls, but rise when it rises — there's no protection either way.
Standard variable rate (SVR)
The lender's own default rate, usually charged once an initial deal ends.
Almost always more expensive than a fixed or tracker deal, so most borrowers remortgage before reverting to it.
Offset mortgage
Your savings are held alongside the mortgage and offset against the balance, reducing the interest charged.
Useful for higher earners with meaningful savings who want flexible access rather than a fixed savings rate.
Is comparing mortgages worth the effort?
It's almost always worth it, particularly if:
- 1
Your current deal is ending
Reverting to a lender's SVR can cost hundreds of pounds more a month than remortgaging onto a new deal.
- 2
Your circumstances have changed
A pay rise, a bigger deposit or an improved credit file can unlock meaningfully better rates than last time.
- 3
You're buying for the first time
Rates and criteria vary widely between lenders, so shopping around directly affects what you can afford.
What do lenders check before offering a mortgage?
Most UK lenders will assess:
Deposit size: Usually a minimum of 5-10% of the property value, with better rates available above 25%.
Income and affordability: Lenders typically lend 4 to 4.5 times household income, subject to a detailed affordability check on your outgoings.
Credit history: Missed payments, defaults or high existing debt can restrict which lenders will consider you.
Employment status: Employed, self-employed and contract applicants are all assessed differently, with self-employed borrowers typically needing two to three years of accounts.
The property itself: A surveyor values the property and some construction types or leasehold terms can restrict lender choice.
How to compare mortgages
Look past the headline rate and check these five things:
- 1
Initial rate vs the follow-on rate
A cheap two-year fix can revert to a lender's standard variable rate of 7% or more once it ends, so know the exit point before you sign.
- 2
Fees, not just the rate
A lower rate with a £1,999 product fee can cost more overall than a slightly higher fee-free deal, especially on smaller loans.
- 3
Overall cost over the deal period
Compare the true cost of the initial period — rate, fees and any cashback combined — rather than the rate in isolation.
- 4
Early repayment charges
Fixed and tracker deals typically lock you in with charges of 1-5% of the balance if you remortgage or overpay heavily before the term ends.
- 5
Flexibility
Look for free overpayment allowances (usually 10% a year), porting rights if you move home, and payment holiday options.
Comparing mortgages: pros and cons
Pros
- Can save thousands over a deal period
- Reveals options beyond your current bank
- Helps you understand realistic affordability
- A broker can access deals not sold directly to the public
Cons
- Best rates require a bigger deposit
- Comparison sites don't show every lender
- Multiple hard searches can affect your credit file if not done carefully
- Criteria change quickly, so quotes can go stale
Should I use a mortgage broker or go direct?
A whole-of-market broker can compare deals across most UK lenders, including some only available through intermediaries, and will handle the application paperwork for you.
Going direct to your existing bank is faster if you're confident it already offers a competitive deal, but you'll only see that one lender's products.
For most borrowers, particularly first-time buyers or anyone with a slightly complex income, a broker's market access and advice are worth the fee or commission.
What happens if I can't keep up mortgage repayments?
Missing payments on your mortgage is reported to credit reference agencies and can ultimately put your home at risk, since the property is used as security for the loan.
Contact your lender as soon as you think you'll struggle. Under FCA rules, lenders must treat customers in financial difficulty fairly and can often offer a temporary reduced payment, a term extension or a short payment holiday.
Free, independent guidance is available from MoneyHelper and Citizens Advice, and speaking to your lender early keeps far more options on the table than waiting until arrears build up.
What are the alternatives to a standard mortgage?
Depending on your situation, also consider:
Shared ownership
Buy a share of a property (often 25-75%) and pay rent on the rest, lowering the deposit and mortgage needed.
Guarantor mortgage
A family member's income or savings supports your application, useful where affordability alone falls short.
Joint borrower sole proprietor
A relative's income boosts affordability without them being named on the property title.
FAQs
About this guide
Written and reviewed by the Grow Your Business team, and kept up to date as rates, rules and provider terms change.
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