Standard Variable Rate Mortgages

A Standard Variable Rate is (rather obviously) a type of variable rate – this means your payments can go up or down according to changes in interest rates.

Unlike a tracker, a Standard Variable Rate (or SVR) does not track above the Bank of England Base Rate at a set percentage.

The rate you pay on an SVR mortgage will be determined by your mortgage lender. So, if the Bank of England Base Rate went up by 1%, your lender could choose:

• Not to increase the SVR
• To increase the SVR (they could choose to increase this by any amount less than 1%, 1% exactly or even make an increase greater than 1%)
• To decrease the rate (although this is certainly the least likely of the three options!)

Your mortgage lender may also increase or decrease their Standard Variable Rate at any time – not only after Base Rate changes.

When you're on a Standard Variable Rate mortgage you won't normally have to pay an Early Repayment Charge if you want to pay off your mortgage sooner or re-mortgage to a new deal.

However, SVRs can be quite expensive – certainly more so than the best tracker rate mortgages available. They also don't give you the payment security of a fixed rate, as the amount you pay can go up or down.

• When interest rates are low, your payments may go down
• Arrangement fees for SVR mortgages tend to be lower than for trackers or fixed rates. There may be no arrangement fee charged at all
• There are generally no Early Repayment Charges, which allows for flexibility if you want to overpay, pay off the mortgage early, or re-mortgage to a new deal

• If interest rates go up, so will your payments. Even an increase of just 1% could add up to £83 a month to your repayments for a £100,000 mortgage
• Standard Variable Rates are not famed as the cheapest mortgage rates available, so you may be paying more than the best tracker or discounted rate mortgages around