Quick answer: A £300,000 home with a £60,000 deposit needs a £240,000 mortgage; at 4.5% over 25 years a repayment mortgage costs £1,334.00 a month (£160,199.38 interest), while interest-only costs £900.00 a month and leaves £240,000 to repay.
How it's calculated
Repayment mortgage: each payment covers the interest and part of the loan, so the debt is cleared by the end. M = P·r ÷ (1 − (1 + r)^−n), where r is the annual rate ÷ 12 and n the number of months.
Interest-only mortgage: you pay only the interest, P × rate ÷ 12, and owe the full loan at the end. Payments are lower but total interest is higher and you need a separate plan to repay.
UK rates follow the Bank of England Bank Rate and lenders' fixed-rate deals, which typically last 2 to 5 years. For home finance in the Gulf use the mortgage calculator.
Worked examples
- £240,000, 4.5%, 25 years, repayment: M = £1,334.00, interest £160,199.38
- Same loan, interest-only: 240,000 × 4.5% ÷ 12 = £900.00, owed at end £240,000
Frequently asked questions
What deposit do I need in the UK?
Most lenders need at least 5% to 10%; a deposit of 25% or more (LTV 75% or less) usually gets lower rates.
Does this include stamp duty?
No. Stamp Duty Land Tax (or LBTT in Scotland, LTT in Wales), legal fees and valuation are paid on top.
Can I get a Sharia-compliant mortgage in the UK?
Yes. Several UK banks offer home purchase plans based on Ijara or Murabaha; the monthly cost at a fixed rental rate is worked out like a repayment mortgage.
What is the difference between repayment and interest-only?
A repayment mortgage clears the debt by the end of the term. With interest-only you pay less each month but still owe the full loan at the end.
What is a fixed-rate period?
UK mortgages often fix the rate for 2 to 5 years, then move to a higher variable rate unless you remortgage. The calculator assumes one rate for the whole term.
Can I get a UK mortgage while living in the Gulf?
Yes, some lenders offer expat mortgages, often with a larger deposit and higher rates. Rules vary, so check with a specialist broker.