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Guide · 9 min read

Mortgages explained

Fix vs tracker, LTV, broker fees, and what happens when your rate ends.

Loan-to-value (LTV)

Loan-to-value = mortgage size ÷ property value. A 10% deposit on a £300k flat = £270k loan = 90% LTV. Rates step down at 90% / 85% / 75% / 60% — pushing across a threshold can save you tens of thousands over the term.

Fixed vs Tracker vs SVR

  • Fixed — your rate is locked for 2/3/5/10 years. Predictable. Most popular. ERCs (early repayment charges) apply if you remortgage during the fix.
  • Tracker — your rate follows the Bank of England base rate + a fixed margin (e.g. base +0.8%). Cheaper when rates are falling, brutal when they're rising.
  • SVR (Standard Variable Rate) — the rate your fix or tracker reverts to. Always the worst rate the lender offers — never stay on it.

The stress test

Lenders must check you could still afford the payment at a higher rate (FCA recommends 8% as a ceiling). That's why our affordability calculator shows both your actual and stressed monthly payment — if 8% looks scary, a longer term or larger deposit usually helps.

Term length

25–35 years is normal. A longer term = lower monthly payment but more interest over the life. Overpaying is usually allowed up to 10% of the loan per year without penalty.

Brokers vs direct

A whole-of-market broker has access to lenders direct customers can't reach (HSBC, Nationwide etc are mostly broker-only on their keenest rates). Fee structures vary: completely free (paid by the lender's commission), fixed fee (£300–500), or fee + commission. Find one in the advisers directory.

What's needed at application

  • 3 months payslips + the most recent P60.
  • 3 months bank statements covering all your accounts.
  • Self-employed: 2–3 years SA302s plus accountant's reference.
  • Photo ID + proof of address.
  • Deposit source proof (savings, gift letter for family gifts).

When your fix ends

Switch to a new rate 4–6 months before your current fix expires. Most lenders let you book a rate now and lock it in for the expiry date — no early-repayment penalty if you stay with the same lender. If a different lender is cheaper, run a full remortgage.

Useful next steps