Calculate Your Total Mortgage Cost
Your Total Mortgage Cost Analysis
Cost Breakdown
Cost Comparison
Interest vs Principal
Interest: 0%
Principal: 0%
Fees vs Total Cost
Fees: 0%
Mortgage: 0%
Cost per £1k Borrowed
Total: £0
Interest only: £0
Cost Breakdown Chart
Understanding Your Total Mortgage Costs
Interest Costs
- The largest component of your total cost
- Depends on rate, term, and loan amount
- Longer terms mean more total interest
- Even small rate differences add up
Upfront Fees
- Arrangement fees from your lender
- Valuation and survey costs
- Legal and conveyancing fees
- Broker fees for professional advice
Hidden Costs
- Early repayment charges
- Exit fees when switching
- Buildings insurance premiums
- Mortgage protection insurance
Cost Optimization
- Compare total costs, not just rates
- Consider shorter terms for less interest
- Factor in overpayment options
- Review and remortgage regularly
Cost Reduction Tips
Shop Around
Compare offers from multiple lenders to find the best total deal, not just the lowest rate.
Increase Your Deposit
A larger deposit can unlock better rates and reduce your total borrowing costs.
Consider Shorter Terms
Shorter mortgage terms mean higher monthly payments but significantly less total interest.
Make Overpayments
Regular overpayments can reduce your mortgage term and save thousands in interest.
Review Regularly
Remortgage every 2-5 years to ensure you're always getting the best available deal.
Factor in All Costs
Consider arrangement fees, insurance, and ongoing costs when comparing mortgages.
Understanding Total Mortgage Costs in the UK (2025)
Your mortgage's total cost is far more than just the loan amount. Understanding all components helps you make informed decisions and potentially save tens of thousands of pounds over your mortgage term.
What Makes Up Your Total Mortgage Cost?
Your total mortgage cost consists of three main components. Understanding each helps you identify where you can save money:
1. Principal (Loan Amount)
The actual amount you borrow. For example, if you buy a £300,000 property with a £60,000 deposit, your principal is £240,000. This is the only part you can control directly by adjusting your deposit or property price.
2. Total Interest (The Big One!)
The cost of borrowing money over your mortgage term. This is typically the largest component of your total cost.
• Monthly payment: £1,336
• Total payments: £400,800
• Total interest: £160,800 (67% of loan amount!)
3. Fees & Charges
Various upfront and ongoing costs that add to your total expense:
- Arrangement Fee: £0-£2,000 (lender's setup fee)
- Valuation Fee: £150-£1,500 (property survey)
- Legal Fees: £500-£1,500 (conveyancing)
- Broker Fee: £0-£500 (if using a broker)
- Other Costs: £500-£2,000 (searches, insurance, etc.)
Reality Check: On a £240,000 mortgage at 4.5% over 25 years, your total cost is approximately £405,000 (£240,000 principal + £160,800 interest + £4,200 fees). You're paying nearly £165,000 extra beyond the loan amount!
Mortgage Term Impact: 25 vs 30 vs 35 Years
Your mortgage term has a massive impact on total cost. Here's how different terms affect a £240,000 loan at 4.5%:
Key Insight: A 35-year mortgage saves you £213/month compared to 25 years, but costs you £70,860 more in total interest. That's enough to buy a new car every 5 years for the entire mortgage term!
8 Proven Ways to Reduce Your Total Mortgage Cost
Small changes can save you tens of thousands of pounds over your mortgage term
Reducing from 30 to 25 years saves £36,960 in interest on a £240,000 loan. Even if monthly payments are £120 higher, you save massively overall.
Overpaying £100/month on a £240,000 mortgage saves £28,000 in interest and clears your mortgage 4 years early. Most lenders allow 10% overpayments annually.
A larger deposit reduces your loan amount AND unlocks better interest rates. Increasing from 10% to 20% deposit can save 0.5-0.8% on rates, saving £30,000-£45,000 over 25 years.
A 0.25% rate difference saves £12,000 over 25 years on a £240,000 mortgage. Use a broker to access exclusive deals and compare 100+ lenders.
Avoid high arrangement fees (£2,000+) unless the rate is significantly better. Sometimes a fee-free mortgage with a slightly higher rate costs less overall, especially if remortgaging within 2-3 years.
Don't stay on your lender's Standard Variable Rate (SVR) after your fixed term ends. SVRs are typically 2-3% higher than new deals. Remortgage every 2-5 years to stay on competitive rates.
If you have significant savings (£20,000+), an offset mortgage links your savings to your mortgage, reducing interest charged. £30,000 in savings can save £25,000-£35,000 in interest over 25 years.
Review your mortgage annually. Check if you can remortgage to a better deal, increase overpayments if your income has risen, or reduce your term if you can afford higher payments.
Frequently Asked Questions
What's included in the total cost of a mortgage?
The total cost includes the loan principal, all interest payments over the mortgage term, arrangement fees, valuation fees, legal costs, broker fees, and any other associated charges. This gives you the complete picture of what your mortgage will cost.
How can I reduce my total mortgage costs?
You can reduce costs by choosing a shorter mortgage term, making overpayments, securing a lower interest rate, minimizing fees, increasing your deposit, and regularly reviewing and remortgaging to better deals.
Should I focus on interest rates or total costs?
Always focus on total costs rather than just interest rates. A mortgage with a slightly higher rate but lower fees might cost less overall, especially if you plan to remortgage within a few years.
How does mortgage term affect total cost?
Longer terms mean lower monthly payments but significantly higher total interest costs. A 25-year mortgage typically costs much less overall than a 35-year mortgage, even though monthly payments are higher. For example, on a £240,000 loan at 4.5%, a 35-year term costs £70,860 more in total interest than a 25-year term, despite monthly payments being £213 lower.
What's the difference between total cost and total interest?
Total interest is the cost of borrowing money over your mortgage term (total payments minus loan amount). Total cost includes the loan principal, all interest payments, AND all fees (arrangement, valuation, legal, broker, etc.). For example: £240,000 loan + £160,800 interest + £4,200 fees = £405,000 total cost.
How much can I save by overpaying my mortgage?
Overpayments can save substantial amounts. On a £240,000 mortgage at 4.5% over 25 years, overpaying £100/month saves approximately £28,000 in interest and clears your mortgage 4 years early. Overpaying £200/month saves £48,000 and finishes 7 years early. Most lenders allow 10% overpayments annually without penalties, though always check your specific terms.
Should I pay a high arrangement fee for a lower interest rate?
It depends on your mortgage term and how long you'll stay on the deal. Generally, high fees (£1,500-£2,000) are worth it if you're borrowing a large amount (£300,000+) and staying on the rate for 5+ years. For smaller loans or if you plan to remortgage within 2-3 years, a fee-free or low-fee mortgage with a slightly higher rate often costs less overall. Use our calculator to compare total costs including fees.
What happens if I stay on my lender's Standard Variable Rate (SVR)?
Staying on SVR after your fixed term ends is expensive. SVRs are typically 2-3% higher than new fixed rates. On a £200,000 mortgage, this means paying £300-£450 more per month, costing £18,000-£27,000 extra over 5 years. Always remortgage before your fixed term ends to avoid SVR rates. Set a reminder 3-6 months before your deal expires.
How does my deposit size affect total mortgage cost?
A larger deposit reduces total cost in two ways: (1) You borrow less, so pay less interest, and (2) You access better interest rates at lower LTV tiers. For example, on a £300,000 property: 10% deposit (90% LTV) at 5.0% costs £419,000 total, whilst 20% deposit (80% LTV) at 4.2% costs £343,000 total - a saving of £76,000! Each 5% deposit increase typically unlocks 0.2-0.4% better rates.
Are offset mortgages worth it for reducing total cost?
Offset mortgages can be excellent if you have significant savings (£20,000+). Your savings are offset against your mortgage balance, reducing interest charged. For example, with a £250,000 mortgage and £30,000 in savings, you only pay interest on £220,000. Over 25 years at 4.5%, this saves approximately £30,000-£35,000 in interest. However, offset rates are typically 0.2-0.5% higher than standard mortgages, so they work best if you maintain substantial savings throughout the term.
What's the true cost of extending my mortgage term?
Extending your term reduces monthly payments but dramatically increases total cost. On a £240,000 loan at 4.5%: 25 years costs £400,800 total (£1,336/month), 30 years costs £437,760 total (£1,216/month, +£36,960 more), and 35 years costs £471,660 total (£1,123/month, +£70,860 more). You're paying £213/month less with a 35-year term, but it costs you £70,860 extra overall - equivalent to £169/month over the entire term!
How often should I review my mortgage to minimize total cost?
Review your mortgage annually, but take action at key times: (1) 3-6 months before your fixed term ends (to avoid SVR), (2) When your income increases (consider overpayments or reducing term), (3) When interest rates drop significantly (check if remortgaging saves money despite early repayment charges), (4) Every 2-5 years (to ensure you're on a competitive rate). Regular reviews can save £50,000-£100,000 over a typical 25-year mortgage term.
Can I reduce my mortgage term later to save on total cost?
Yes! Most lenders allow you to reduce your term when remortgaging or sometimes during your current deal. For example, if you started with a 30-year mortgage and after 5 years reduce it to 20 years remaining (instead of 25), you'll save tens of thousands in interest. Alternatively, maintain your current term but increase monthly payments through overpayments - this achieves the same result with more flexibility. Always check if your lender charges fees for term reductions.