How to Get a Mortgage with Low Interest Rates in the UK

Buying a home is one of the biggest financial decisions you will ever make. In the UK, the property market continues to be competitive, and mortgage rates play a huge role in how much you pay over the years. A difference of just 1% in interest rates could mean paying thousands of pounds more (or less) over the life of your loan. That’s why finding a mortgage with a low interest rate is so important in 2025.

This guide explains how to qualify for the best mortgage deals in the UK, what factors lenders consider, and practical steps you can take to reduce your interest rate. By the end, you’ll know exactly how to position yourself to save money and secure a home loan on the best possible terms.

1. Understand What Affects Mortgage Interest Rates

Before you start shopping around, you need to know what shapes the rate you get offered. UK lenders look at several factors:

• Bank of England Base Rate – The central bank’s base rate strongly influences mortgage pricing. If the base rate is high, mortgage rates also rise. When it’s low, lenders usually offer cheaper deals.
• Your Credit Score – A strong credit score shows lenders you are responsible with debt. Higher scores usually unlock lower interest rates.
• Loan-to-Value (LTV) Ratio – This measures how much of the property’s value you are borrowing. If you borrow 95% of the value, that’s a high LTV. If you borrow only 60%, that’s a low LTV. Lower LTV mortgages usually come with better rates.
• Income and Affordability – Lenders check your income, expenses, and existing debts to see if you can handle repayments. Higher disposable income improves your chances.
• Type of Mortgage – Fixed-rate, tracker, or variable mortgages all come with different pricing. Fixed rates are often slightly higher but provide stability.

Knowing these factors helps you control what you can and prepare for what you can’t.

2. Improve Your Credit Score Before Applying

Your credit score is a key weapon in securing a low interest rate. Lenders rely on it to measure your reliability. Here are some steps to polish your score before applying:

• Check your credit report with Experian, Equifax, or TransUnion. Correct any errors.
• Register on the electoral roll. Being on it proves stability of address.
• Clear or reduce credit card balances – lenders dislike maxed-out credit.
• Avoid missed or late payments on any bills, even mobile phones or utilities.
• Limit new credit applications. Each application leaves a footprint that can lower your score temporarily.

Even an improvement of 50–100 points on your credit score could move you into a better bracket and save you thousands over the mortgage term.

3. Save a Larger Deposit

The bigger your deposit, the lower your LTV ratio, and the cheaper your interest rate. For example:

• A 95% mortgage (only 5% deposit) usually carries higher rates.
• A 90% mortgage (10% deposit) is slightly better.
• A 75% or 60% mortgage (25–40% deposit) often unlocks the best rates in the UK.

Even if you can only save an extra 5–10% of the property value, that may drop you into a lower LTV band with much better deals.

Tip: If saving is difficult, consider Lifetime ISAs (LISA), where the government gives you a 25% bonus on savings for your first home, up to £1,000 per year.

4. Shop Around and Compare Lenders

Never settle for the first mortgage offer. Different lenders have different risk appetites, which means their pricing varies widely.

Ways to shop:

• Comparison websites like MoneySuperMarket, Compare the Market, or MoneySavingExpert.
• Mortgage brokers who can access exclusive deals not listed online.
• Direct banks and building societies that sometimes reward loyal customers with better rates.

A broker is especially useful if your situation is complex (self-employed, poor credit, unusual income sources).

5. Consider Fixed vs Variable vs Tracker Mortgages

Choosing the right mortgage type also affects how low your rate feels over time.

• Fixed-rate mortgages lock your interest rate for 2, 5, or 10 years. These are great for stability but can be slightly higher than variable at the start.
• Variable-rate mortgages can move up or down depending on the lender’s standard variable rate (SVR). You may start lower, but risk rates rising later.
• Tracker mortgages follow the Bank of England base rate plus a set percentage. These can be attractive if base rates are expected to fall.

Tip: In uncertain times, many UK buyers choose 2- or 5-year fixed mortgages to lock in security while keeping flexibility for future refinancing.

6. Strengthen Your Income Profile

Lenders want reassurance that you can comfortably afford repayments. To get better rates, try to:

• Increase your income where possible (side jobs, bonuses, promotions).
• Reduce debts like loans or overdrafts before applying.
• Avoid large new financial commitments (car loans, credit cards) just before your mortgage application.

A cleaner financial profile makes you look safer, which often means lower interest rates.

7. Use Government Schemes for First-Time Buyers

If you are a first-time buyer in the UK, you may qualify for government-backed programs that help you secure better mortgage deals.

• Shared Ownership – Buy part of a home (25–75%) and pay rent on the rest. Mortgage required is smaller, which can make rates lower.
• First Homes Scheme – Eligible buyers can purchase new homes at a discount of 30% (sometimes more). Lower property price means lower borrowing.
• Lifetime ISA – As mentioned earlier, this boosts your deposit with a 25% government bonus.

These schemes do not directly lower the mortgage interest rate, but by lowering the loan size or LTV, you may qualify for better offers.

8. Timing Matters – Watch the Market

Interest rates in the UK are influenced by wider economic conditions. If inflation falls, the Bank of England may cut base rates, which could bring mortgage deals down.

Keep an eye on:

• Bank of England rate announcements.
• Inflation and wage growth reports.
• News from major lenders about rate cuts or hikes.

Sometimes, waiting even 2–3 months can make a noticeable difference in the rate you get.

9. Consider Remortgaging Later

Even if you cannot secure the absolute lowest rate right now, remember that you can remortgage after your fixed term ends. Many homeowners use this strategy to gradually move into better deals as their equity grows.

For example:

• Start with a 90% LTV mortgage at a slightly higher rate.
• After 2–3 years, as your property value rises and your repayments reduce the balance, your LTV drops to 80%.
• Remortgage into a lower-rate deal.

This step-by-step approach helps you save more over the long run.

10. Seek Expert Advice

A professional mortgage broker can often save you both time and money. They know which lenders are more flexible with credit scores, which banks are friendlier to self-employed people, and where exclusive low-rate deals are hiding.

While brokers may charge a fee (sometimes £300–£500, or a small percentage of the loan), the savings in interest could far outweigh the cost.

Practical Example: How Rates Affect Costs

Let’s say you borrow £200,000 over 25 years:

• At 6% interest, your monthly payment is around £1,289.
• At 5% interest, your payment drops to £1,170.
• That’s a difference of £119 per month, or over £35,000 saved across the mortgage term.

This shows why every small reduction in rates makes a big difference.

Final Tips to Secure a Low Rate

• Start improving your credit score at least 6–12 months before applying.
• Aim for at least a 10% deposit, ideally 20% or more.
• Compare deals across brokers, banks, and building societies.
• Choose a mortgage type that matches your financial stability and risk tolerance.
• Keep an eye on economic trends—sometimes patience pays.
• Don’t be afraid to remortgage if rates improve later.