Key Stage: KS4
Year group: Year 10
Age range: 14–15
Duration: 60 minutes
Subject: Maths / PSHE / Citizenship
Cost: Free

Learning aim

Pupils can explain what a mortgage is, identify the four key components (deposit, term, interest rate, monthly repayment), and calculate basic monthly repayments.

CURRICULUM National Curriculum links

PSHE Association KS4 L19: about credit and the consequences of borrowing
Citizenship KS4: financial products and services including mortgages
Maths KS4: compound interest, percentage change, and financial mathematics

RESOURCES What you'll need

Mortgage anatomy diagram (deposit + principal + interest + term)
Affordability rule chart (4.5× salary)
Sample mortgage scenarios worksheet
Calculators
Repayment lookup table

LESSON Lesson structure (60 minutes)

Opening
HOOK

Show a picture of a £250,000 house. Ask: "How would you buy this if you have £25,000 in savings?" Most pupils will say "borrow the rest." Confirm: yes — that loan is called a mortgage. About a third of UK households are buying their home with a mortgage — it’s the biggest loan most people take out in a lifetime. It's the biggest loan most people take out in their lifetime.

Direct teach
TEACH

Define mortgage: "a long-term loan secured against a house — if you don't keep paying, the bank can repossess the house." Four key components on the board: (1) Deposit = your money upfront, usually 5-25% of the house price (more deposit = better mortgage deals); (2) Loan amount (principal) = what you borrow = house price - deposit; (3) Term = how many years to pay it back, typically 25-30 years; (4) Interest rate = what the bank charges you, currently 4-6% APR on most fixed-rate deals. Worked example: £250,000 house, £25,000 deposit, £225,000 loan, 5% over 25 years = ~£1,316/month.

Pupils apply
GUIDED

Pupils work through three scenarios on the worksheet (using a lookup table for monthly repayments to avoid the maths burden): Scenario A: £200k house, £20k deposit, 25 yrs, 5%; Scenario B: £300k house, £45k deposit, 30 yrs, 4.5%; Scenario C: £400k house, £100k deposit, 20 yrs, 6%. For each, calculate the monthly repayment and the TOTAL amount paid over the term. Discuss: which is most expensive in total? Why?

Stretch / depth
CHALLENGE

Display the affordability rule: "UK banks usually lend up to 4.5× your annual salary." Then: "If you earn £30,000 a year and have a £15,000 deposit, what's the maximum house price you could afford?" Pupils calculate: max loan = £30,000 × 4.5 = £135,000. Add deposit: max house = £150,000. "What about with a £30,000 deposit?" (max £165,000). Build: deposit size has as much impact as salary on what you can afford. This is why so many first-time buyers struggle — saving the deposit is the hardest step.

Close
PLENARY

Each pupil writes: "A mortgage is ___" and "If I wanted to buy a £200,000 house, I'd need at least a ___ deposit." Share three. Final question: "Why does a bigger deposit usually mean a CHEAPER mortgage deal?" (Less risk to the bank → better interest rate.)

DIFFERENTIATION Adapting for all learners

Support (working below ARE)

Use round-number scenarios (£200k house, 5% rate, 25 years). Use a pre-printed monthly repayment table to look up rather than calculate. Focus on understanding the four components.

Stretch (working above ARE)

Compare 25-year vs 30-year mortgage on the same house. Which has higher monthly repayment? Which costs more in TOTAL interest paid? Discuss the trade-off — lower monthly payment vs paying more over time.

SEND SEND adaptations

For pupils with dyscalculia: use round numbers (£200k house, 5% rate, 25 years gives a clean monthly figure). Provide the lookup table prominently. For pupils with autism: provide a step-by-step "questions to ask when getting a mortgage" card.

EAL EAL support

Vocabulary: "mortgage", "deposit", "principal", "term", "interest rate", "monthly repayment", "affordability", "secured loan". Sentence frame: "A mortgage of £___ over ___ years at ___% costs £___ per month."

ASSESSMENT Assessment criteria

Pupils can: (1) define mortgage in their own words; (2) name the four key components; (3) calculate a monthly repayment using the lookup table; (4) explain why a bigger deposit usually means a cheaper mortgage.

HOME Homework pack

Four activities to understand UK mortgages. ~30 minutes.

Mortgage vocabulary

What pupils do: Define these 6 terms: deposit, loan-to-value (LTV), fixed-rate mortgage, variable-rate mortgage, mortgage term, repayment vs interest-only.

Expected output: A 6-row vocabulary table.

Marking guidance: 1 mark per accurate definition. 6 marks total.

Deposit calculation

What pupils do: Sarah wants to buy a £250,000 house. She needs at least a 10% deposit. How much is that? How long would she need to save at £400/month? What about at £800/month?

Expected output: Three calculations.

Marking guidance: 2 marks each: £25k deposit, ~62 months at £400, ~31 months at £800. 6 marks total.

Monthly payment

What pupils do: Use an online mortgage calculator: a £200,000 mortgage over 25 years at 5% interest. What's the monthly payment? What's the total cost over 25 years?

Expected output: Two figures + a 2-sentence reflection on total interest cost.

Marking guidance: 2 marks for monthly (~£1,169), 2 marks for total (~£350,000), 2 marks for reflection.

Extension (optional)

What pupils do: What is "Stamp Duty Land Tax" (SDLT)? When does a first-time buyer have to pay it? When don't they? Find the 2026/27 thresholds.

Expected output: A research-based 4-point answer.

Marking guidance: Up to 8 marks for accurate, complete research.

Family discussion prompt (safeguarding-aware)

Ask a working adult: "Did you save up for a house? How long did it take, and what was hardest about it?"

SAFEGUARDING Classroom safeguarding

Note for teachers: Some pupils' families may not own their home — they may rent, live in social housing, or have other arrangements. Frame the lesson neutrally: home ownership is one option, not a requirement or a measure of success. Do not ask pupils about their family's housing situation.

ANSWERS Answer key & differentiation

Answer guide

Guided scenarios (accept lookup-table rounding): A — £180,000 loan, 25 yrs at 5% ≈ £1,052/month, ≈ £316,000 total; B — £255,000, 30 yrs at 4.5% ≈ £1,292/month, ≈ £465,000 total; C — £300,000, 20 yrs at 6% ≈ £2,149/month, ≈ £516,000 total. C costs most overall: the bigger balance and higher rate outweigh its shorter term.
Challenge: max loan = £30,000 × 4.5 = £135,000; with £15,000 deposit the ceiling is £150,000, with £30,000 it is £165,000 — deposit moves the ceiling pound-for-pound.
Plenary: a £200,000 house needs at least £10,000 (5%); bigger deposit = lower loan-to-value = less risk to the bank = cheaper rate.
Homework: Sarah's deposit £25,000; ≈ 62–63 months at £400/month, ≈ 31 at £800; £200,000 over 25 years at 5% ≈ £1,169/month and ≈ £350,000 total. SDLT extension: don't hard-mark figures — accept answers matching the live GOV.UK 2026/27 thresholds, with first-time-buyer relief correctly described as paying nothing up to a higher relieved threshold.

Support (scaffold)

Colour-code the four components on the worked example (deposit, loan, term, rate) before touching the scenarios.
Teach the per-£1,000 shortcut from the lookup table: at 5% over 25 years each £1,000 borrowed costs about £5.85 a month — then scale.
Fixed frame: "price − deposit = loan", spoken before every scenario.

Stretch (challenge)

Recompute scenario A with a 10% deposit — how do the loan, LTV and likely rate band change?
Rank the three scenarios by total interest (total paid minus loan) and explain why the shortest term still tops the list.
Overpayment teaser: what would £100/month extra do to scenario A's term and interest? Estimate, then check with a calculator.

ISAs explained — the tax-free way to save (KS4 · Year 10)
Credit cards — how they work and the minimum payment trap (KS4 · Year 11)
Compound interest in action — why time beats rate (KS3 · Year 9)
All lesson plans (KS1 · KS2 · KS3 · KS4) →