Standard Variable Rate Mortgages

What is a standard variable rate mortgage?

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You’ll be charged the lender’s standard variable interest rate with an SVR mortgage, which means your monthly payments could go up or down - but you will be on an open-ended deal.

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What is a standard variable rate mortgage?

Mortgage providers have a standard variable rate – or SVR – which is the amount of interest they charge on their main mortgage deals.

A standard variable rate mortgage is an open-ended deal rather than a fixed-term offer, and a borrower on a fixed-rate mortgage will often move onto their lender’s open-ended SVR mortgage when the fix comes to an end - unless they choose to move to a different deal.

How do standard variable rate mortgages work?

The amount of interest charged on your standard variable rate mortgage payments can change depending on whether your provider decides to increase or decrease its standard variable rate.

Standard variable rates are mainly influenced by changes to the Bank of England base rate, but a lender will also include their own costs in the rates they charge.

How long does a standard variable rate mortgage deal last?

Standard variable rate mortgage rates don’t have a lock-in period or some of the other restrictions you might get with a fixed-term offer. This means you could overpay your mortgage if you have the money available, without being charged a fee.

Advantages of a standard variable rate mortgage

Some benefits of a standard variable rate mortgage include:

  • Your mortgage might have lower fees than a fixed-rate offer
  • You can overpay or clear your mortgage without having to pay a fee

Disadvantages of a standard variable rate mortgage

Possible disadvantages to a standard variable rate mortgage include:

  • Your mortgage provider’s standard variable rate is likely to increase and decrease during the mortgage deal – which can make it difficult to budget for your monthly payments
  • If the mortgage payments increase by too much, you might find that you struggle to afford the cost

Comparing standard variable rate mortgages

Comparing standard variable rate mortgage quotes can help you find the best standard rate mortgage for you. You can use MoneySuperMarket’s mortgage comparison tool to compare standard variable rate quotes for fixed terms and for the whole mortgage term. You can also view other mortgage types in the results view to see if a standard variable mortgage is right for you.

You’ll then be able to filter mortgage types by initial monthly cost to help give you an idea of the mortgage repayments you might be making. You might also be able to get a higher maximum loan-to-value – Max LTV – on a standard variable mortgage than you’d get from other mortgage types, so it’s worth comparing this percentage against other mortgage types to see if you could borrow more if you needed to.

It’s important to remember that quote examples are based on a provider’s current standard variable rate, and they won’t take into account your financial situation and credit history. So if you decide to proceed with getting a mortgage in principal offer and then an actual mortgage offer, the rate and terms you’re offered may be different.

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