What is a variable rate mortgage?Most lenders offer a standard variable rate mortgage (SVR). Variable rates are usually determined entirely by the lender. Although the Bank of England Base rate may have some effect on it, it is in the lenders prerogative to change it as and when they choose.
This rate differs from a tracker mortgage, as it does not always vary with the Bank of England Rate by a set percentage.
The variable rate you are on will be set by your lender, and your payments are likely to vary unlike those on a fixed rate mortgage.
A standard variable rate is also commonly the type of mortgage interest rate that you are put on after finishing a lender’s introductory deal.
Different types of variable rate
- Tracker rate mortgage
- Standard variable rate mortgage (SVR)
- Discounted rate mortgage
A move in interest rates means that your payments can go up and down, but they will not necessarily mirror every change to the Bank of England Base rate.
The rate you pay will be determined by your mortgage lender. Even with an introductory discounted rate you may not know that exact figure coming out of your account every month.
If you are placed onto a variable rate when your deals ends , you may want to look into remortgaging your property onto a new rate.
However there are some benefits. For example most standard variable rate mortgages allow overpayments , which can help you pay off your mortgage early and pay less interest overall.
Contact an expert at London and Country today to assess your finances and pick the best rate for you.