Standard Variable Rate
The standard variable rate (SVR) is the lenders most common interest rate used for the majority of mortgage holder's interest rate charges. It is the most important mortgage interest rate to understand because, at some point during your mortgage term, you are likely to be paying the SVR. The SVR rises and falls in conjunction with the BOE’s base rate. This can make it difficult to plan your finances because your mortgage interest payments may go up and down from month to month.
Most mortgage policies are transferred to the lenders SVR after the promotional introductory interest period ends. For example, if you begin your mortgage with a fixed rate for the first five years, after those five years end you will be transferred to the lenders SVR. Even if the fixed rate was very low the SVR might be large – this is where the lender makes their money. It is important to know the lenders SVR even if you start your mortgage with a promotional low interest rate.
The advantage of the SVR is that they usually hold no early
redemption
penalties. This means you may be able to pay your mortgage off
early and save money on interest payments, or you could remortgage
to pay a lower interest rate with a different lender. Usually you
can only increase or decrease your capital repayments if you have
a flexible mortgage.
Other rates: