How Expensive Is a Mortgage?
When planning to buy a home or invest in property, one of the biggest questions is: how expensive is a mortgage? The answer isn’t always straightforward. Mortgages come in different types, terms, and interest structures, all of which impact the total cost you’ll pay over time. In this guide, we’ll break down the true cost of a mortgage, including how much you can borrow, why certain mortgages cost more than others, and how mortgages compare to rent. Whether you’re a first-time buyer or considering a buy-to-let investment, here’s what you need to know.
How Much Can I Borrow Mortgage?
A major factor in mortgage affordability is how much you’re eligible to borrow. You might be wondering: how much can I borrow mortgage-wise? UK lenders typically base mortgage borrowing on your income, outgoings, and credit profile. A common rule of thumb is 4 to 4.5 times your annual salary. However, this can vary depending on the lender, whether you’re applying solo or jointly, and the type of mortgage you’re applying for.
Using a “how much can I borrow mortgage” calculator is a great way to get an estimate, but always speak to a broker or lender for an accurate figure based on your personal situation.
The Main Types of Mortgages and Their Costs
1. Residential Mortgages
These are the most common and generally the most affordable in terms of interest rates. They are intended for people buying a property to live in. Monthly repayments depend on:
- The size of your loan
- The interest rate
- The term length
2. Buy-to-Let Mortgages
Now you may be wondering, “is a buy to let mortgage more expensive?” or “are buy to let mortgages more expensive?” The answer is: yes, generally.
Why Is Buy to Let Mortgage More Expensive?
Is a buy to let mortgage more expensive?
Buy-to-let mortgages tend to have:
- Higher interest rates
- Larger deposit requirements (typically 25% or more)
- Additional fees (like higher product or arrangement fees)
So, how much more expensive is a buy to let mortgage? It varies, but rates can be 0.5% to 1.5% higher than a comparable residential mortgage. Over the term of the loan, this can translate into thousands of pounds in extra cost. That’s why many ask, “why is buy to let mortgage more expensive?”
Fixed Rate Mortgages: 2-Year vs 5-Year. Which Costs More?
You may have heard people ask: “why does it work out more expensive in a 5 year fixed rate mortgage than 2 years?” Let’s explain.
Why Does It Work Out More Expensive in a 5 Year Fixed Rate Mortgage Than 2 Years?
A 5-year fixed rate mortgage usually comes with higher interest rates than a 2-year deal. Why? Lenders price in the risk of interest rate changes over the longer term. The benefit of a 5-year fix is stability, your monthly payments won’t change for half a decade. But you often pay a premium for that certainty.
So, although your payments stay the same longer, a 5-year fixed deal can work out more expensive than a shorter-term option, especially if interest rates drop during your term. However, if interest rates increase significantly and you have fixed a lower rate for five years, you could also have made a very smart decision!
Additional Costs to Consider
When calculating how expensive is a mortgage, it’s not just about the interest rate. There are other costs involved:
- Arrangement fees (£0–£2,000+ depending on the lender)
- Valuation fees
- Legal fees
- Stamp Duty (for homes above £250,000 as of 2025)
- Early repayment charges (if you exit a deal early)
These fees can add thousands to the overall cost, so always check the total cost of the deal, not just the interest rate.
Rent vs Mortgage: What’s More Expensive?
What is more expensive rent or mortgage?
Another common question is: why is rent more expensive than a mortgage, or what is more expensive, rent or mortgage? This has become a hot topic in the UK housing debate.
Why Is Renting More Expensive Than a Mortgage?
While mortgage payments are often cheaper month-to-month than rent, buying a home requires a large upfront deposit, legal costs, and a long-term financial commitment. Still, over time, mortgage payments build equity, while rent doesn’t. For many people, this is why renting feels more expensive, you’re paying someone else’s mortgage, not your own.
So, How Expensive Is a Mortgage?
In short, how expensive is a mortgage depends on the type you choose, the rate you lock in, and your personal financial situation. Here’s a quick comparison:
| Mortgage Type | Average Deposit | Typical Interest Rate | Relative Cost |
|---|---|---|---|
| Residential (2-year fix) | 5–10% | Lower | Least expensive |
| Residential (5-year fix) | 5–10% | Medium | Moderately more |
| Buy-to-Let | 25%+ | Higher | Most expensive |
If you’re deciding between a 2-year vs 5-year fixed, remember: why does it work out more expensive in a 5 year fixed rate mortgage than 2 years?, It’s usually down to risk pricing. If you’re eyeing a rental investment, know that buy to let mortgages are more expensive, with higher rates and stricter lending criteria. No matter your path, understanding the real cost of a mortgage helps you make smart, informed choices, could potentially save thousands in the long run.
Need help figuring out how much you could borrow, or what kind of mortgage suits you best? Try an online calculator or speak to a UK mortgage broker for expert guidance.
