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A home loan is a loan advanced to you by a lender so you can buy a property. It can also be used to finance the purchase of a business, a home or a motor vehicle. It is important to find out the costs involved in home loans. The following table shows some of the things that may be included in your mortgage costs.

Example Your deposit is 2,000

2,000 monthly mortgage payment (including National Insurance) 200

Interest Rate on the mortgage (min 1% or max 4.5%) 0.75%

Fees (includes other mortgage charges such as Property Tax) 3.3%


These are the direct costs of maintaining a home. A number of utilities are required such as electricity, gas and water. You will have to use these things too, if you need to, or you may find it is cheaper to buy a better quality appliance or have a local mechanic supply a service instead.

The cost of water and electricity will be included in your Electricity and Water bills in the household budget.

The average monthly housing costs for England and Wales, as of 31 March 2013. There are different costs for different people depending on your situation. The figures below are based on average mortgage payment plus national insurance.

Cost of Rent

If you rent a room or flat, your rent will be deducted from your mortgage in the month you pay it.

A mortgage can be fixed or variable. A fixed mortgage has a fixed rate of interest. Most people pay it at a fixed rate for 30 years, unless they’re over 55. They pay a little more for lower interest rates in retirement. A variable mortgage gives you an interest rate that increases over time. The interest rate depends on how much your income changes. For example, if you earn more money, you pay less interest. Fixed mortgage rate 115,240 The interest rate on a 115,240 fixed-rate mortgage at 3% is 118,720.

Fixed mortgage rate 4,200 The interest rate on a 4,200 fixed-rate mortgage is 449,440. Variable mortgage rate 6,400 The interest rate on a 6,400 variable-rate mortgage is 4,000. The interest rate for a 30-year fixed mortgage is 3%. The interest rate for a 30-year variable mortgage is 3%. Home Equity Line of Credit Interest rates on home equity lines of credit vary by type and interest rate. If you apply for an open-end, conventional fixed-rate home equity line of credit, you’ll probably pay a fixed rate that is based on the prime rate, also known as the current interest rate.

If you apply for a reverse mortgage, the bank may set a variable interest rate that changes daily and may be set at a level that varies by time period of the loan.