How much does the average mortgage cost?

So, that’s what we’ve gone away and done – collected some averages and written up some pointers to help you decide how to manage your mortgage.

When it comes to mortgages, as with any loan, the interest rate is one of the most important factors. Unlike most other loans though, mortgages are very big – often they’ll be the biggest loan you’ll ever take out in your life.

For the latest average mortgage rates, see:

• Rightmove for fixed-term mortgagesOpens in a new window

• Bank of England for Standard Variable Rates (SVR)Opens in a new window 

Loan to value (LTV) is how much of your home you own, and how much needs to be mortgaged. For example, buying a £200,000 property with a £50,000 deposit would be a 75% LTV. The Which? LTV calculatorOpens in a new window works it out for you.

You also need to think about the mortgage fee – which can range from nothing to over £2,000. If you choose to add the fee to the mortgage (rather than paying it upfront) be aware that you’ll also pay interest on it. 

Most new mortgages are paid off over 25 to 40 years. The longer the mortgage, the less you’ll have to pay each month. But you’ll pay a lot more interest in the long run if you take a longer mortgage.

Most mortgages let you overpay by a certain amount each year, without paying fees. This means you repay the mortgage quicker, so your mortgage term reduces. 

Check the terms and conditions of your mortgage for how much you can repay without facing an early repayment charge.

If you want to repay more than your mortgage provider will allow you to, you can save it up to pay off in a lump sum at the end of your fixed deal. This will help you avoid extra fees. 

You can either make regular payments or only when you can afford to. To see how much interest you could save, try MoneySavingExpert’s overpayment calculatorOpens in a new window

Many mortgages only promise a fixed or discounted rate for a certain period, typically between two and 10 years. When this expires, you’ll normally be moved to your mortgage lender’s Standard Variable Rate (SVR) – at a higher interest rate. 

To avoid this, you can secure a new mortgage deal three to six  months before your deal ends. This involves getting a new mortgage with the same or different lender. As part of this process you can ask to change the mortgage term.

How much should you pay on a mortgage each week or month? Of course, it depends on the size of the mortgage, your deposit, the house value and your own incomings and outgoings.

It’s really important to make sure you budget, and check you can afford your own repayments – our mortgage affordability calculator can help you out.

According to Money.co.uk the average house price for a first time buyer in December 2022 was £246,000. 

If you pay a typical deposit of 10%, around £24,600, that means you would apply for a mortgage of £221,400.

An average 90% mortgage being offered for a two-year fixed deal was 5.91% in November 2023 according to Rightmove. 

If you had a 25-year mortgage at that rate the repayments would be £1,414 a month. A 30-year mortgage would cost £1,314 a month. 

This is all based on average figures, but you can enter your own into our mortgage calculator for a more accurate answer. 

When you think about your mortgage repayments, you’ll probably see it as paying for your home. But actually a lot of the money goes towards paying the interest. 
 
This is for two reasons.

1. Mortgages are for large sums of money, so the interest charges, especially when you first take out a mortgage, are large.
2. Mortgages last for many years, so the interest has a long time to grow.  

That’s why the interest rate is so important, and why a shorter mortgage can be better. But, no matter the deal you get, lots of your money will be spent on the interest on your mortgage. 

The average UK property price is around £290,000 according to Land registryOpens in a new window Assuming a 10% deposit, a typical mortgage would be £261,000.

Based on this, here are four examples to show how the rate and term can alter the total interest. The rates are based on the average five year fixed rateOpens in a new window and Standard Variable RateOpens in a new window

This assumes you pay the same interest rate for the entire mortgage term, which is unlikely. In reality, you’d probably choose to remortgage to a new deal or your variable rate would change periodically. But it gives you an indication. 

At the highest interest rate, you’d pay an extra £82,000 in interest to repay over a further five years.  

Hopefully this shows it’s important to keep checking your mortgage deal and track your payments. If you’re struggling to pay, see our help with mortgage arrears guide.