Residential Mortgages Deals & Rates
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Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
11.06.2025
Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
11.06.2025
Residential Mortgages Deals & Rates
Buying a home is a major life milestone, and while it’s exciting, it can also feel overwhelming. At Ascot Mortgages, we’re here to make the process of getting a residential mortgage straightforward and stress-free.
Whether you’re a first time buyer, upgrading to a larger property or refinancing your current home, we can provide you with expert advice tailored to your specific circumstances. From comparing product options to finding a competitive mortgage rate, we’ll guide you every step of the way. Our goal is to help you make confident, informed decisions and secure a mortgage that fits your budget and lifestyle.
Contact us today for your free, no-obligation residential mortgage consultation.
What is a Residential Mortgage?
A residential mortgage is a type of loan taken out to buy a home you intend to live in. It’s one of the most common ways people in the UK finance their property purchases. The mortgage is secured against your property, meaning if you can’t keep up with your payments, the lender has the right to take possession of your home.
This type of mortgage is for people who want to buy a house to live in, rather than to rent out or sell for profit. The amount you can borrow depends on several factors, including your income, the size of your deposit, and the value of the property.
Understanding Residential Mortgage Rates
Understanding residential mortgage rates is crucial because they directly impact the total cost of buying a home. Even a small change in interest rates can significantly alter your monthly payments and the amount you owe over the life of your loan.
What are Mortgage Rates?
A mortgage rate is the interest charged by a lender on the money borrowed to buy a home. It’s shown as a percentage and determines how much interest you’ll pay in addition to the loan amount.
How Does Interest on a Residential Mortgage Work?
Interest is what you pay the lender for borrowing the money to buy your home. The amount you pay in interest depends on your residential mortgage rates. Here are the main types:
- Fixed Interest Rates: These remain the same for a set period, giving you peace of mind that your payments won’t change. Once the fixed term ends, you’ll usually be moved to the lender’s standard variable rate unless you remortgage.
- Variable Interest Rates: These can go up or down, depending on the lender’s decision or movements in the Bank of England’s base rate. They involve more risk, but could save you money if rates fall.
What are the Different Types of Interest Rate?
Interest rates can be categorised mainly into:
- Fixed-Rate Mortgages: These provide consistency in payments, ideal if you want to avoid fluctuations.
- Tracker Mortgages: These follow the Bank of England’s base rate, meaning your payments could go up or down.
- Discounted Variable Rate Mortgages: These offer a discount on the lender’s SVR, but the rate can change.
How are Residential Mortgage Rates Determined?
Rates can vary depending on a combination of things, including the lender, the type of mortgage, and your financial situation. Here are some of the key factors that determine residential mortgage rates:
- Bank of England’s base rate – the base rate set by the Bank of England influences how much it costs banks and other lenders to borrow money. This directly affects mortgage rates.
- Economic factors – inflation, employment levels and the health of the economy have an impact on residential mortgage rates.
- The financial situation of the borrower(s) – your income, debt level, credit history and the size of your deposit will all influence the rate you’re offered.
- Lender policies – each bank and building society sets its rates, taking competition and risk tolerance into account.
- Mortgage type – the type of residential mortgage you choose (fixed or variable) and the length of the loan term can influence the interest rate.
Pros and Cons of Different Mortgage Types
Each type of residential mortgage has its own upsides and drawbacks. The right choice for you will depend on your budget, the level of risk you’re comfortable with and your future plans. Here are some of the main advantages and disadvantages of each type:
- Fixed rate residential mortgages
These lock in your interest rate for a set period, usually 2, 5, or 10 years.
Pros:
- They offer stability, which is great if you want to know exactly what your payments will be each month.
- They protect you from rate increases.
Cons
- If interest rates fall, you won’t be able to benefit from lower rates. This means that you could end up paying more than if you were on a variable rate.
- You may incur early repayment charges if you decide to exit the fixed term early.
- Variable rate residential mortgages
With a variable rate mortgage, the rates can change over time, often in line with the Bank of England’s base rate.
Pros:
- If interest rates drop, you could end up paying less than you would if you were on a fixed rate.
- If you decide to switch mortgage deals or pay your mortgage off early, you’re less likely to incur an early payment fee.
Cons:
- While variable rates can be lower than fixed rates initially, they might go up, making your monthly payments unpredictable. If they go up significantly, your mortgage repayments could end up being much higher than you anticipated.
How do Changing Mortgage Rates Affect Me?
If you choose a variable rate mortgage, your mortgage payments are likely to increase if the Bank of England’s base rate goes up. If the base rate falls, your mortgage payments may decrease.
If you opt for a fixed rate mortgage, your monthly payments will not increase if the base rate rises. However, you won’t benefit from falling rates either.
What are Residential Mortgage Rates Today?
Residential mortgage rates in the UK fluctuate regularly based on a variety of factors, including the Bank of England’s base rate, market conditions and each individual lender’s approach. The rate you get will also depend on your financial situation and the type of mortgage you opt for. While exact rates vary depending on lender and borrower circumstances, you can expect them to fall within a range influenced by whether the mortgage is fixed, tracker or variable. You can check real-time mortgage rates here.
How a Residential Mortgage Works
When you take out a residential mortgage, you’re borrowing money to buy a home, and you’ll repay this loan in monthly instalments over a set term, typically 20-25 years. Here’s what you need to consider:
- Deposit: You’ll need a deposit, which is a percentage of the property’s value. The more you can put down, the better the mortgage deal you’ll likely get. Most lenders look for at least 5% to 20%.
- Loan to Value (LTV): This is the size of your mortgage compared to the value of the property. If you’re buying a £200,000 home with a £150,000 mortgage, your LTV is 75%. A lower LTV generally means lower interest rates.
- Repayment: You can choose between a repayment mortgage, where you pay off both the capital and interest, and an interest-only mortgage, where you only pay the interest. The latter results in lower monthly payments but requires a plan to repay the capital at the end of the term.
How Much Deposit Do I Need for a Residential Mortgage?
The deposit is a key part of securing a residential mortgage. Typically, you’ll need at least 5% to 20% of the property’s value. For example, if you’re buying a home worth £300,000, you’ll need a deposit of £15,000 to £60,000. The bigger your deposit, the more favourable your mortgage options – often with lower rates.
What is Loan to Value (LTV) for Residential Mortgages?
Loan to Value (LTV) is an important concept to understand. It’s the ratio of the loan amount to the property’s value. If you have a high LTV, say 90%, you’re borrowing 90% of the property’s value, which is riskier for the lender. That risk is often reflected in a higher interest rate. On the flip side, a lower LTV (e.g., 60%) might get you a much better rate because you’re borrowing less relative to the value of the home.
Eligibility Criteria for Residential Mortgages
Before a lender offers you a residential mortgage, they will want to be confident that you can afford to repay the loan amount. To assess your ability to repay, they will take many factors into consideration, including:
- Your credit history – this is a record of your borrowing and repayments and can indicate your likelihood to repay or default on your mortgage. A good credit score will make it easier to secure a mortgage. A bad credit history doesn’t mean that it’s impossible to get a mortgage but you are more likely to face high interest rates and you may need a bigger deposit.
- Employment – a lender will want to see that you have a steady income and you earn enough to cover monthly mortgage repayments without putting you into financial trouble.
- Outgoings – your household bills and other spending will be reviewed as part of your application. Lenders may see gambling payments, for example, as a red flag that you’re not responsible with money.
- Debt – any debts you have, including credit card debts and car finance, will be reviewed as part of your application. Lenders will want to know that you are repaying these debts on time and that you will be able to afford to keep up repayments while paying a mortgage.
- Savings – regular savings demonstrate financial stability and make your mortgage application stronger.
- The amount you want to borrow – having a big deposit and a low loan to value (LTV) ratio makes you more attractive to lenders as you’ll need to borrow less.
- Your deposit – with a larger deposit, you’re likely to be able to access a wider range of mortgage deals.
- Your age – you must be over 18 to apply for a residential mortgage. Lenders usually want assurance that you can repay the mortgage by a specific age, typically before you reach retirement age. Many lenders impose a maximum age limit for borrowers that applies at the end of the mortgage term.
How to Apply for a Residential Mortgage
Here’s a breakdown of the main steps involved in applying for a mortgage in the UK. Whether you’ve already begun your journey or you’re just starting out, at Ascot Mortgages, we can help to guide you through the process.
- Check your credit score We recommend checking your credit score before making your mortgage application so you can identify and rectify any potential issues. If you have a poor credit score, you can take action to improve it. For example, getting on the electoral roll, making payments on time and building your credit history can help to improve your rating.
- Assess your finances It’s important to review your finances to ensure you can afford to take on a mortgage. If you don’t already have one, create a budget detailing all your income, expenses and any debt you may have to understand how much you can realistically afford. Doing this may also help you to identify areas for improvement, such as frequent overdrafts, impulsive spending and high reliance on credit cards.
- Prepare your documentation Start gathering your documentation. At a minimum, you’ll need recent bank statements (covering the past three to six months) and proof of identity, address, income and deposit.
- Find out how much you could borrow Use a mortgage calculator to find out how much a lender is likely to offer you. This is typically around four to four and a half times your annual income, depending on your circumstances.
- Compare mortgage deals Different lenders have different criteria and offer different rates and terms. Doing your research before you apply can help you to find the best deal for you.
- Get an Agreement in Principle (AIP) Once you’ve found the right deal, apply for an AIP. This will give you an indication of how much you will be able to borrow and signals to estate agents that you’re a serious buyer. At Ascot Mortgages, we can help you get quick AIP approval and access to more lenders.
- Start searching for a new home Start looking for homes that are within your budget. You can do this by registering with estate agents and property portals like Rightmove. Consider factors like location, property size, transport links, local schools and amenities, and your future plans.
- Make an offer Once you find a property that ticks your boxes, you can make an offer.
- Apply for a mortgage If your offer is accepted, you can apply for a mortgage through a broker or directly with a lender. You will need to decide if a fixed or variable is right for you. This step involves submitting documentation including payslips, ID and bank statements.
- Getting a decision After the lender has carried out their checks and valued the property in question, they will give you a final decision on whether your mortgage will be approved.
Based on a mortgage of £300,000 at 75% LTV and 25 years Today’s best buy mortgages
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Residential Mortgage Calculators
Using a residential mortgage calculator can help you estimate your monthly repayments based on the mortgage amount, interest rate, and term. This tool is invaluable for understanding what you can afford and how different interest rates will affect your monthly budget.
Mortgage Repayment Calculator
Monthly Repayments Explained
Your monthly repayments are determined by the type of mortgage you choose and the interest rate. Let’s break it down:
How Are My Payments Calculated?
Your payments are calculated based on the mortgage amount, interest rate, and term length. The higher the loan amount or interest rate, or the shorter the term, the more you’ll pay each month.
Capital and Interest Repayments
Most people opt for a capital and interest repayment mortgage, where each month you pay back part of the loan (the capital) and some interest. Over time, you’ll see more of your payment going towards the capital, meaning you’re gradually reducing the amount you owe.
Interest-Only Repayments
With an interest-only mortgage, your monthly payments only cover the interest, not the capital. This means lower payments each month, but at the end of the term, you’ll still owe the original loan amount. It’s essential to have a plan in place for repaying that capital, whether it’s through savings, investments, or selling the property.
How Can You Find the Best Residential Mortgage?
Finding the best residential mortgage isn’t just about the lowest interest rate. You need to consider the fees, the flexibility of the mortgage, and your long-term plans. This is where a residential mortgage broker can be helpful. We can help you navigate the many options out there, find deals you might not see on your own, and guide you through the application process.
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FAQ
The amount you can borrow for a residential mortgage depends on several factors, primarily your income, outgoings, and credit history. Lenders typically calculate the maximum mortgage you can afford by using a multiple of your annual income. For instance, if your annual salary is £50,000, a lender might offer a mortgage up to four or five times your income, resulting in a potential loan amount of £200,000 to £250,000.
However, lenders also take into account your regular outgoings, such as debts, household bills, and lifestyle costs. They’ll perform a stress test to ensure you can afford the repayments even if interest rates rise. It’s wise to speak to a residential mortgage broker who can assess your situation and give you a clearer idea of how much you could borrow.
When applying for a residential mortgage, you’ll need to provide several documents to prove your identity, income, and financial stability. Here’s a checklist of the typical documents required:
- Proof of Identity: Passport or driving licence.
- Proof of Address: Utility bills, council tax statement, or bank statements, usually dated within the last three months.
- Proof of Income: Payslips (usually the last three months) if you’re employed, or tax returns and accounts if you’re self-employed.
- Bank Statements: Typically the last three to six months, showing your income and outgoings.
- Proof of Deposit: Evidence of where your deposit is coming from, such as savings account statements or a gifted deposit letter if it’s from a family member.
Lenders might ask for additional documents depending on your circumstances, such as proof of bonus income or details of any outstanding loans.
Yes, it is possible to switch from a buy-to-let mortgage to a residential mortgage, but the process requires careful consideration and lender approval. This change typically happens when you decide to move into a property you originally bought as an investment.
To make this switch, you’ll need to inform your lender and apply for a residential mortgage product. The lender will reassess your financial situation, including your income and credit history, to ensure you meet the criteria for a residential mortgage. Keep in mind that the rates and terms of a residential mortgage can be different from those of a buy-to-let mortgage, so it’s essential to weigh up the costs involved.
Yes, you can have two residential mortgages, but it’s not as straightforward as it may seem. The most common scenarios where this occurs include buying a new home before selling your current one or purchasing a second property for a family member to live in.
However, having two residential mortgages can be tricky because lenders need to be confident that you can afford the repayments on both properties. They will scrutinise your income and outgoings even more closely than for a single mortgage. In some cases, lenders may require you to justify why you need a second residential mortgage rather than a buy-to-let mortgage.
If you want to rent out a property that you originally bought with a residential mortgage, you’ll need to get consent to let from your lender. This is essentially permission to let out your home while keeping your current mortgage in place.
The process for getting consent to let involves contacting your lender and explaining your situation. The lender will assess whether your mortgage terms allow for letting and may adjust your mortgage rate to reflect the increased risk of renting out the property.
Keep in mind that some lenders may charge a fee or increase your interest rate as a condition of granting consent to let. Additionally, if you plan to let the property long-term, the lender may require you to switch to a buy-to-let mortgage instead.
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Legal
Ascot Mortgages authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.org.uk) under reference 776062. The FCA do not regulate some forms of mortgages. The guidance and advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate it will be £599 per mortgage account. Ascot Mortgages Ltd give you the option to pay a non-refundable fee of £1299 payable with the application. If this option is taken, Ascot Mortgages Ltd will refund any procuration fee received by the lender.
Ascot Mortgages Limited is registered in England and Wales and have their registered office at 8 Webster Court, Westbrook, Warrington, WA5 8WD. The company’s registration number is 06764971.
We are a credit broker, not a lender. We work with the whole of the lending market. We may receive commissions that will vary depending on the lender, product, or other permissible factors. The nature any commissions model will be confirmed to you before you proceed.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT
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