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Understanding UK Mortgages & Stamp Duty
Buying a home in the UK involves two distinct costs that most calculators lump together or ignore entirely: the mortgage itself (repayment or interest-only), and Stamp Duty Land Tax (SDLT) — a one-off tax on the purchase price that varies significantly depending on whether you're a first-time buyer or already own property.
Repayment vs. Interest-Only
A repayment mortgage pays down both interest and principal every month, reaching zero balance at the end of the term. An interest-only mortgage pays just the interest — the full loan amount is still owed as a lump sum when the term ends.
Stamp Duty Is Banded
SDLT isn't a flat percentage of the whole price — it's progressive, like income tax. Only the slice of the price that falls within each band is taxed at that band's rate, so the effective rate rises gradually as price increases.
First-Time Buyer Relief
First-time buyers pay 0% up to a higher threshold and a reduced rate on the next band — but only while the property price stays at or below £625,000. Above that, the relief disappears entirely and standard rates apply to the full price.
Upfront Cash, Not Just the Deposit
SDLT is due at completion alongside your deposit, so the real cash you need on moving day is deposit + stamp duty — not just the deposit alone. This calculator totals both for you.
Worked Example
A £500,000 property with a £50,000 (10%) deposit, a 25-year term at 5.5%, on a repayment basis:
- Loan amount: £450,000.
- Monthly payment (repayment): approximately £2,763.39.
- Total interest over 25 years: approximately £379,019.42.
- Interest-only monthly payment instead: £2,062.50 (with the full £450,000 still due at term end).
As a first-time buyer, SDLT on £500,000 is just £3,750 (5% only on the slice from £425,001-£500,000). As a home mover on the same price, standard bands apply and SDLT jumps to £12,500 — over three times as much, since none of the 0% first-time-buyer threshold applies.
£500,000 Purchase
- First-time buyer SDLT: £3,750
- Home mover SDLT: £12,500
- Total upfront cash (FTB): £53,750
SDLT Bands at a Glance
Standard (home mover) rates: 0% up to £250,000; 5% on the portion from £250,001-£925,000; 10% on the portion from £925,001-£1,500,000; 12% on anything above £1,500,000.
First-time buyer relief: 0% up to £425,000; 5% on the portion from £425,001-£625,000. If the price exceeds £625,000, the relief no longer applies at all and the standard bands are used on the full price instead.
Important disclaimer: the SDLT thresholds and rates shown here reflect standard England & Northern Ireland residential rates as of 2024 for illustration purposes only — these rates and bands can and do change, so always confirm the current rates with HMRC or a solicitor before relying on this figure. Scotland and Wales use entirely different transaction tax systems (Land and Buildings Transaction Tax and Land Transaction Tax, respectively) with their own bands and rates, which this calculator does not model.
Key Takeaways
- SDLT Is Progressive: Only the portion of the price in each band is taxed at that band's rate — never assume a flat percentage on the whole price.
- The £625,000 Cliff Edge: First-time buyer relief disappears entirely above £625,000 — right at that threshold, moving from FTB to standard rates can mean thousands more in tax.
- Interest-Only Isn't Free: A lower monthly payment on an interest-only mortgage still leaves the full loan balance owed at the end of the term — budget for how you'll repay it.
- Budget for Total Upfront Cash: Your deposit is only part of what's due at completion — add SDLT to know the true cash you need on moving day.