SVR Watch

SVR stands for Standard Variable Rate, and this is the rate you usually move on to once your initial mortgage rate finishes, unless you remortgage to another mortgage deal.

An SVR is a variable rate, which means it can move up and down over time. It isn’t tied to the Bank of England base rate, so lenders may or may not change the SVR when the base rate moves.

Although SVRs often move up or down in line with changes to the Bank of England base rate, it’s entirely up to your lender. They could pass on any increase or decrease in base rate in full, partially or make no change at all. That means your SVR could change at any time, and not just when the Bank of England raises or lowers the base rate.

The SVR is usually more expensive than other mortgage rates, but there may be some circumstances when it might be beneficial to stay on your SVR, for example, if you’re planning to pay off your mortgage soon or if you only have a very small balance remaining.

The main disadvantage of staying on your lender’s SVR is that they tend to be much higher than other mortgage rates, so you could end up paying hundreds - or even thousands - of pounds more in interest every year compared to if you were on a different mortgage deal. Another downside of staying on your lender’s SVR is that it’s entirely up to their discretion how high or low this rate goes, which can make it difficult to budget with any certainty.

The main benefit of SVRs is that there aren’t generally any Early Repayment Charges, so if you want to pay off your mortgage in full, or move to a different deal, you can do so without incurring any additional cost. It also means that you can usually make overpayments of any size whenever you want. Other mortgage deals may cap the amount you can overpay each year, and if you exceed this limit, you may have to pay early repayment charges.