FAQ 016 | When Buying in the UK, Is a Bigger Mortgage Always Better?

Author: SJW Research & Intelligence

Brand: SJW UK Properties

When buying in the UK, is a bigger mortgage always better?

This is a question many clients put to us when applying for a UK mortgage. Some ask: “If the bank is willing to lend me more, surely I should borrow more?” Others take the opposite view: “I have cash available. Shouldn’t I repay as much as I can, so that the debt is as small as possible?” Neither question has a standard answer. Since 2015 we have become increasingly convinced that borrowing more is not inherently better, and neither is borrowing less. What matters is whether the arrangement fits the family’s cash flow, its asset allocation and its plans for the future.

Which clients might choose a higher loan-to-value?

For some clients, a mortgage is not simply a financing tool but part of their asset allocation. They want to retain more cash for their business, their children’s education, future investments, further acquisitions or unforeseen needs. Used sensibly, borrowing allows their capital to stay flexible.

The amount borrowed also needs to be considered alongside tax planning

Drawing on our experience of serving clients at SJW UK Properties since 2015, we believe the level of borrowing should be planned not only around cash flow but alongside the ownership structure. Where an investment property is concerned, holding it personally or through a company can produce different tax outcomes. Taking the UK tax rules in force in July 2026 as an example, where an investment property is held by a company, qualifying mortgage interest can generally be treated as a business cost for tax purposes. Where the property is held personally, mortgage interest is treated differently, subject to the tax policy in force at the time. We therefore encourage clients to consider borrowing, ownership structure and tax planning together, rather than looking at the loan amount in isolation. Circumstances differ from family to family, and so does the arrangement that ultimately suits them.

The level of borrowing also needs to be seen in the context of interest rates

Since 2015 we have worked through several UK interest rate cycles. When rates were very low, we saw overseas buyers secure fixed-rate products at a little over 1%. In those conditions, for a client with sound cash flow management and a clear repayment plan, a somewhat higher loan- to-value may have been worth considering, on the reasoning that when rates are already at historic lows there is limited room for them to fall further and a real possibility that they will rise. Conversely, when market rates are already relatively high, a new phase of the cycle may follow. This is simply what we have observed across changing markets since 2015, and not a forecast of where rates will go. We always encourage clients to form their own view in the ligh of prevailing market conditions, their own cash flow and the guidance of a professional mortgage adviser.

In business since 2015: mortgage planning is part of asset planning

What ultimately shapes a mortgage arrangement is not the lender, but the client’s plans for the years ahead. Will there be further investment? Is a business venture planned? Is early retirement in view? Is greater liquidity a priority? Each of these will influence how the borrowing should be structured.

SJW Insight

A UK mortgage is not only a financial product; it is also a long-term asset management tool. The loan-to-value ratio, the ownership structure, the tax arrangements, the interest rate environment and the family’s future plans all interact with one another. We are not mortgage advisers, and we are not tax advisers. The UK places considerable weight on specialist advice, and rightly so. What we have set out above is a set of observations drawn from serving a large number of overseas clients at SJW UK Properties since 2015, offered in the hope that it gives you one more perspective before you decide.

Last updated: July 2026

Disclaimer: This article is provided for general information only and does not constitute legal, tax, financial, mortgage or investment advice. UK tax policy and lending rules may change. Please rely on the current legislation and the advice of professional tax and mortgage advisers.