Standard Variable Rate Mortgage
The default rate
When a current deal ends
paying more than you need to…
Standard Variable Rate Mortgage
A standard variable rate mortgage (SVR) is specific to the lender. It can be referred to as their default mortgage rate to which their borrowers can be moved once their existing fixed-rate, tracker or discount mortgage ends.
Often a more costly way to mortgage is often wise to opt for switching to a new mortgage deal just before or once any current deal ends.
Individual mortgage lenders set their own standard variable rate, be it up or down at any time as and when they feel the market dictates. Factors such as the lender’s own cost of borrowing can influence decisions
SVR’s can be influenced by Bank of England base rate changes, but unlike tracker mortgages, SVRs do not track a set percentage above the base rate, therefore lenders are not bound by any outside changes.
This type of mortgage does not have any lock-in periods or additional restrictions one might get with a fixed-term mortgage.
This means SVR borrowers are free to move on to a more competitive deal whenever they are ready or their current borrowing terms allow. There are usually no early repayment charges applied or incurred for switching.
Questions about SVR Mortgages?
Here are some commonly asked standard variable rate questions
Why are standard variable rates so high?
SAR’s is a variable rate which a mortgage lender can change at any time. It is known as their default interest rate which the lender can move its mortgage customers to when their initial deal ends.
Lenders can change their SVR at any time, taking their own internal factors into consideration as a means of doing so, such as increases in costs of their operation and borrowing. As such a lenders standard variable rate isn’t focused on what is best or beneficial for the customer.
In most cases, a lender’s SVR will be substantially higher than the interest rate a borrower was paying prior to being on an SVR mortgage therefore monthly repayments will rise as a result.
How often does the standard variable rates change?
Some lenders can adjust their variable rates monthly, while others may adjust every three months. Variable rates are often capped, but the caps can be as high as 25%.
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