How much does a £150k mortgage over 25 years really cost?

The real cost of a £150,000 mortgage over 25 years

When you’re looking at a mortgage, it’s easy to focus on the monthly repayment. But the true cost of borrowing isn’t just the loan amount—it’s the interest charged over time, plus any fees, and the way your mortgage deal changes during the term.

For a £150,000 mortgage over 25 years, the overall cost can vary significantly depending on:

the interest rate you get
whether it’s capital repayment or interest-only
how long you stay on the initial deal (often fixed or discounted)
what happens when that deal ends
mortgage fees and whether they’re added to the loan
whether you overpay and how often

Even relatively small interest rate differences can translate into a much higher total cost over the life of the mortgage.

Monthly repayments: capital repayment vs interest-only

With a typical residential mortgage, most borrowers choose capital repayment. That means each payment reduces the loan balance over time.

Capital repayment

Your monthly payment covers interest + capital.
Your balance reduces gradually.
Your mortgage is expected to be repaid by the end of the term.
Monthly payments are usually higher than interest-only.

Interest-only

Your monthly payment covers interest only.
The loan balance usually remains the same.
The full balance is due at the end of the term.
Monthly payments are usually lower, but you need a plan for repaying the capital.

Why this matters for “real cost”

Two mortgages can have the same loan amount and term, yet very different total costs because the way you repay the balance is different.

How interest rate and term affect the total cost

A mortgage is a long-term loan with interest added. The longer you borrow, the more interest you pay—because the balance is outstanding for longer.

Interest rate impact (illustrative)

To illustrate how sensitive costs are, consider a £150,000 mortgage over 25 years on a capital repayment basis. The table below shows how the total repaid can change as the interest rate changes.

Illustrative example only: these figures are for demonstration and assume a constant interest rate and repayment structure. Your actual repayment depends on the specific product, rate type, and how the rate changes over time.

Interest rate (illustrative)	Total amount repaid over 25 years (illustrative)
1%	£169,500
2%	£190,768
3%	£213,358
4%	£237,428
5%	£263,162

As you can see, the total cost can move significantly as interest rates rise.

What happens when your deal ends?

Most mortgages don’t stay on the same rate for the full 25 years. A common structure is:

an initial fixed or discounted period (often 2, 3, or 5 years)
then a switch to a lender’s standard variable rate (SVR) or another product rate

When the initial deal ends, your repayments can increase if the new rate is higher. That affects not just the monthly figure, but also the overall interest paid for the remaining years.

Key points to consider:

the rate you move onto can be higher than your original deal
you may be able to remortgage to a new deal, but the best option depends on your circumstances at the time
fees and product features can influence which option is most cost-effective

Mortgage fees: why they can change the real cost

The interest rate is only part of the story. Many mortgages also include fees, such as:

arrangement / product fees
valuation fees
legal and conveyancing-related costs (often separate from the mortgage product itself)

Fees can be added to the loan

Some deals allow you to add certain fees to the mortgage balance. That can make the upfront cost easier, but it also means you may pay interest on the fee amount over time.

Remortgaging often means more fees

If you remortgage repeatedly, fees can accumulate. Even where fees are modest, the long-term impact can be meaningful—especially if you switch deals frequently.

Does extending the term reduce the overall cost?

Extending the mortgage term can reduce monthly repayments, because the loan is spread over more years. However, it usually does not reduce the overall cost.

In most cases:

longer terms mean more interest is charged
monthly payments may feel more manageable
the total amount repaid over the life of the mortgage is typically higher

Some borrowers extend term temporarily to manage cash flow, with the intention of overpaying later. Whether that works well depends on the mortgage’s features and any early repayment charges.

Overpayments: how they can affect cost

Overpaying can reduce the balance and/or shorten the term, which can reduce the amount of interest you pay.

Practical considerations include:

whether the mortgage allows overpayments
whether there are limits (for example, a percentage of the balance per year)
whether overpayments trigger an early repayment charge
whether you’re overpaying consistently or in one-off amounts

Over time, regular overpayments can make a noticeable difference to total cost—particularly on longer terms.

Is a £150k mortgage affordable on a typical income?

Affordability isn’t determined by the loan size alone. Lenders generally consider a range of factors, such as:

income and employment stability
existing monthly commitments
credit history
the size of the deposit (if any)
the interest rate and repayment type
the term you apply for

Even if a £150,000 mortgage might appear affordable on paper, the actual decision can depend on your wider financial picture and the mortgage rate available at the time.

Putting it all together: what drives the “real cost” most

For a £150,000 mortgage over 25 years, the biggest drivers of real cost are usually:

Interest rate (and what rate you move onto after the initial deal)
Repayment type (capital repayment vs interest-only)
Total term and how long you stay on each rate
Mortgage fees (and whether they’re added to the loan)
Overpayments and whether early repayment charges apply

Common questions about £150k mortgages over 25 years

Is a 25-year mortgage better than a 30-year mortgage?

It depends on what you prioritise. A shorter term often reduces total interest, while a longer term can reduce monthly repayments. The “better” option depends on your budget and how you plan to manage the mortgage over time.

How much of a mortgage payment goes to interest vs capital?

On a capital repayment mortgage, early payments typically include more interest than capital. As the balance reduces, a larger share of each payment goes towards repaying the loan.

What is the real cost of borrowing £150,000?

The real cost is the total amount repaid over the term, plus any fees and charges, minus any overpayments you make. The interest rate and how it changes over time usually have the largest effect.