What are Standard Variable-Rate Mortgages?

What is a standard variable-rate mortgage?

A standard variable rate (SVR) is a variable-rate mortgage that you’ll usually be moved on to once your existing fixed-rate, tracker, or discount mortgage ends. This will be the case unless you choose to switch to a new deal.

All mortgage providers have an SVR. Bear in mind that the interest rates on a standard variable-rate mortgage tend to be higher than most mortgage options. If you don’t remortgage or switch deals before the end of your current deal, you may be faced with heftier monthly instalments.

If you're remortgaging or buying a property, we'd recommend comparing rates rather than sticking with your lender's SVR.

• Fixed rate mortgages

• Tracker mortgages

• Discounted variable rate mortgages

How does a standard variable-rate mortgage work?

Mortgage lenders set their own standard variable rates. This, along with your mortgage repayments, can go up or down at any time.

Although the SVR can be influenced by changes in the Bank of England base rate, unlike tracker mortgages, SVRs don’t track above the base rate at a set percentage. As such, SVRs don’t have to strictly follow it.

Instead, other factors such as the lender’s cost of borrowing can influence the SVR. What’s more, the lender can choose to raise or lower their SVR whenever they want.

This means that, if the base rate rose by 1%, a lender might decide to:

• Increase their SVR by 1%

• Increase their SVR by more than 1%

• Increase their SVR by less than 1% (less likely)

• Leave the SVR unchanged (unlikely)

Similarly, if the base rate went down by 1%, a lender might choose to lower their SVR by 1% or less. They may even not lower it at all.

Can I take out a standard variable-rate mortgage?

You don't take out a standard variable-rate - you're moved onto it when your current mortgage term ends.

You're free to remain on your current lender's SVR and generally won’t be restricted if you decide to move to another deal or provider.

Learn more: Should I remortgage with the same lender?

If you want a mortgage rate that rises and falls with the BoE base rate, you can apply for a tracker mortgage which will often give you a better rate of interest versus your lender's SVR. Note that most tracker mortgages require you to 'fix' for between two and five years, so factor that into your decision and appetite for risk should interest rates rise.

How long does a standard variable-rate mortgage deal last?

Standard variable-rate mortgage rates don’t have a lock-in period or any other restrictions you might get with a fixed-term mortgage.

This means you are free to move on to a more competitive deal whenever you are ready. You won’t have to pay an (ERC) for switching.

When might a standard variable-rate mortgage be right for me?

There are different situations in which a standard variable-rate mortgage might act as a good short-term solution.

For example, if you’re in the process of moving home and haven’t yet found a portable mortgage that ticks the right boxes, this type of mortgage could come in handy. It may also be useful should your moving date not match the end of your existing mortgage term.

Learn more: How do mortgages work when you move house?

How can I find out what my mortgage’s standard variable rate is?

If you still have the paperwork from your mortgage application and arrangement, you can usually find the lender’s standard variable rate there. If the information isn’t there, just get in touch with your mortgage provider – they’ll be able to tell you all you need to know.