What is a residential mortgage?

A residential mortgage is a loan secured on a home that the borrower, or a close family member, will live in. The lender holds a charge over the property until the loan is repaid, and can take possession if payments are not made. They are regulated by the FCA (FCA Handbook MCOB, accessed 20 Oct 2026).

Residential status, in mortgage terms, means the property is the borrower's main home, rather than a rental, a holiday let or a business property. Buying a house with a mortgage means the buyer owns the home from completion, with the lender's charge registered against it until the debt is cleared.

The main difference between a residential and a buy-to-let mortgage is who lives in the property. A residential mortgage is for a home the borrower lives in and is assessed on personal income. A buy-to-let mortgage is for property rented to tenants and is assessed mainly on the expected rent, usually with a larger deposit.

Letting a home on a residential mortgage, including on short-let sites, needs the lender's consent. How consent works, and when a switch to buy-to-let is needed, is set out on the consent to let page.

Most residential mortgages are taken on a repayment basis, where each monthly payment covers the interest and part of the loan, so the debt is cleared by the end of the term. On an interest-only basis, the payment covers only the interest and the loan is repaid at the end from another source, which lenders need to see.

A simple repayment mortgage is the most common type, with the rate either fixed for a period or variable. Terms often run for decades, and lenders set limits on the borrower's age at the end of the term, which can shorten the term for older buyers.

Many residential lenders accept a deposit of 5% of the price, with the government's mortgage guarantee scheme supporting some lending at that level (GOV.UK, accessed 20 Oct 2026). A larger deposit moves the loan into a lower loan-to-value band, which usually brings more lenders and lower rates. The deposit normally comes from savings, a sale or a family gift.

Lenders check where the deposit has come from, as part of anti-money laundering rules, so bank statements and gift letters are usually needed. How deposits and loan-to-value bands combine with the rate is explained on the residential mortgage rates page.

Residential mortgage lenders check income, outgoings, credit history, the deposit and the property. Income is usually shown with payslips, or accounts and tax returns for the self-employed. Lenders run an affordability assessment that tests whether payments would still be affordable if rates rose, and many cap borrowing at a multiple of income.

The property must be acceptable to the lender, with checks on its construction, condition, tenure and value. Leasehold homes with short leases, non-standard construction and some new-build flats have narrower lender choice. Credit problems narrow the choice too, though specialist lenders consider many cases.

A residential mortgage application usually starts with a mortgage in principle, then a full application once an offer on a home is accepted. The lender checks documents, carries out a valuation and, if everything fits its rules, issues a mortgage offer. A conveyancer then handles the legal work through to exchange and completion, when the money is released.

The whole process often takes several weeks from application to offer, longer for complex cases. Applying with complete documents, and avoiding new credit while the application is running, helps it move faster.

What a decision in principle shows, and why a full application can still be declined, is explained on the mortgage in principle page.