Standard Variable Rate

Standard variable rate is one of the most common types of mortgage interest rate that most of the people would go for after finishing the introductory discounted deal. Standard variable rate is a type of remortgage plan where your monthly payments can go up and down depending upon the movement in the interest rate . However, the Standard Variable Rate (or SVR) does not track above the Bank of England Base Rate at a set percentage. Also, the rate you will pay on your standard variable remortgage plan would be determined by your lender. You lender may also increase or decrease their Standard Variable Rate at any time – not only after Base Rate changes.

What makes the standard variable rate interesting for the borrowers is the fact that the base rate at The Bank of England base rate has stood at an historic low of 0.5% since March 2009, which result in relatively lower levels of SVRs.

So, if your previous mortgage deal has ended and you have been transferred onto a low SVR, then get ready to take advantage of that low rate and stay on it. However, this is not it, there is a major risk involved here. As a lender's SVR offers no rate security and thus the lender can increase its SVR at any time. In such cases, if you are on low financially and relying on your low rate SVRs then you might feel a bit vulnerable. However, if something like this happens try to remortgage onto a fixed-rate deal as it will get you more stability based on the interest rates.

What makes the standard variable rate even more interesting is the fact that 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.