Standard Variable Rate
A Standard Variable Rate is 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.
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 remortgage 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.
Advantages and Disadvantages
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When interest rates are low, your payments may go down |  |
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 |
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Arrangement fees for SVR mortgages tend to be lower than for trackers or fixed rates. There may be no arrangement fee charged at all | |
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 |
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There are generally no Early Repayment Charges, which allows for flexibility if you want to overpay, pay off the mortgage early, or remortgage to a new deal | ||