The great thing about mortgages is that every lender offers different rates and allowances to suit their customer’s needs. This gives the customer greater choice and flexibility and so your lender’s ‘default’ rate of interest charged will reflect the wider mortgage market at any time. This interest rate is known as Standard Variable Rate (SVR).
Read on to find out more about SVR mortgages.
An SVR mortgage charges an interest rate that can vary. It is used when customers have reached the end of their fixed rate, capped or discounted period and have yet to sign a new mortgage deal or switch providers.
It is not to be confused with tracker mortgages (which closely follow the Bank of England base rate), as the percentage of interest charged can be significantly higher, in some cases. The lender decides their current mortgage rates based on their position in the wider market. However, standard variable rate mortgage rates are often ‘influenced’ by base rate fluctuations.
Find out more about tracker mortgages and others in our Mortgage Types Guide.
Typically, the SVR rate can be from 3-6% interest (average figures at the time of writing) but can change at any time.
Glen and Barbara are comparing mortgages, as they would like to remortgage their property.
Glen is searching the mortgage comparison sites and finds a good two-year fixed rate mortgage charging 2.69% interest. Barbara is also investigating the mortgages on offer and finds a cheaper two-year deal for 2.5% interest. At first glance, Barb had found the better deal. However, Glen noted that the lender of the cheaper fixed rate deal charges 5.88% interest SVR, whereas the lender he found charges 3.69% SVR.
As they are looking for a deal that covers only a short time, the couple opt for the slightly more expensive 2.69% fixed rate deal. This is because they know that when their fixed period ends, they need to be transferred to an SVR rate that will won’t dramatically shake up their monthly mortgage budget.
If you would like some free advice on choosing the right mortgage deal for you, get in touch with an independent mortgage broker. They can offer you a free, no-obligation quote.
My biggest concern was finding a mortgage with no strings attached. My options were clearly explained to me and I felt confident about the decision. Alice Silverman, Stoke-on-Trent
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATION EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
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