Applying for a mortgage? What to consider

Buying a home is an equally exciting and exhausting process. By the time you get to sorting out your mortgage, you will likely have already been faced with plenty of paperwork. But making the right decision for you on what kind of mortgage to choose can make a significant difference down the road.

How does a mortgage work?

Before you get into choosing a mortgage, it helps to have a basic understanding of how they work. In the UK, the most popular type of mortgage is a fixed-rate mortgage. This basically means that you’ll be choosing a plan where the amount you pay each month is set for the the entirety of that mortgage. So, if you had a fixed rate of 4%, this is the interest rate of your mortgage for each year during that contract. Mortgage contracts typically last for two to five years in the UK, and then you’ll need to find a new mortgage.

Some people instead opt for variable rate mortgages, where the rates may move up or down during the time of the loan depending on Bank of England interest rates. The downside of this is you don’t know exactly how much you will be paying for your mortgage, but the upside is if the mortgage environment is poor when you go to buy or get a new mortgage, it doesn’t stick you into the current situation for the next few years if conditions improve. Of course, you could also end up paying more if rates go up.

Should you use a mortgage broker?

Because a mortgage makes such a financial impact, the vast majority of Brits use a mortgage broker. These brokers will offer advice on what mortgage and lender would be the best fit for you and often have access to a wider range of products than if you just went to the lender directly. They are generally either paid through a fee, which averages around £500, or through a commission from the lender.

If you choose to go with a broker, it’s worth shopping around and asking for recommendations. Your estate agent might work with a broker, but you aren’t obligated to use them. When choosing a broker, it’s worth asking if they are able to access mortgages from a variety of lenders. Some will be tied to a specific lender, which may not give you the most breadth to get the best deal.

How big should my downpayment be?

Many people aim to make a deposit on a home of 20%. If you have the cash, you can opt to pay more than this, and if you don’t have 20%, there are options for smaller deposits. The options that are available to you will be largely dependent on factors like income, credit history, and recent spending habits.

Recently, some mortgages have been offered at just a 2% deposit if you meet strict criteria. However, it’s important to understand what you’ll be paying in the future if you opt for a lower deposit.

Let’s work through an example to help you get an idea. According to Rightmove, the average price listed for a home in January 2026 was £368,031. To make our number crunching simpler, let’s say our new buyer, Linda, will be purchasing a home for £350,000. If she puts down a 20% deposit, and plans for a 25-year mortgage, Nationwide’s quote for a five-year fixed rate mortgage is currently £1,500 a month with a 4.14% initial rate. Over five years, she would pay £89,980 without the product fee.

If she instead made a deposit of 10%, the offer from Nationwide would be a £1,707 payment each month with a 4.25% rate. Over five years, this would cost £102,389 without the product fee, which is over £10,000 more than the 20% deposit.

Not only is the rate of interest higher, but that rate is put on a larger pot, so it expands much more rapidly. When deposits go below 10%, the interest rate typically climbs higher. So, make sure to crunch the numbers before agreeing to anything, and keep the payments achievable. And enjoy your new home!

Source: Nationwide mortgages as of 9 February 2026. Rates may vary based on individual situations.