FISCUS MORTGAGES - INFORMATION AND ADVICE

Standard Variable Rate (SVR)

The standard variable rate is defined as a rate that the lender changes from time to time, depending on market conditions. This should not be confused with a tracker mortgage, which varies only with the Bank of England base rate. The standard variable rate can be changed, in effect, to whatever the bank feels it needs (or wants) to charge.

The standard variable rate is still predominantly geared around the Bank of England base "repo" rate like a tracker mortgage. The difference is that a tracker mortgage will be fixed at a specific interest premium above the base rate, while the SVR premium can vary.

The standard variable rate is generally considered to be the least competitive rate on the market and most people will find they are placed onto the SVR after initial fixed-term deals have ended, such as discount or fixed-rate mortgages. The SVR makes the lender a decent profit, and is used to recoup the initial investment in generous discounts and fixed rates, used to lure a new customer to a mortgage product.

Quite often, the standard variable rate is used in combination with other offers to retain customers in the longer term. For example, a lender may offer a flexible mortgage that allows overpayment and repayment holidays, but to compensate for this flexibility will charge the SVR.

As with a tracker mortgage, this is best during periods when the interest rate is low. As there is no cap, the standard variable rate could prove to be an expensive option with a rising base rate, but will benefit you as the base rate falls. To compare the best available standard variable rates on the market, we suggest you take a look at our standard variable mortgage tables, which allow an easy comparison of the leading SVR mortgages in the UK.

Our advice for those on standard variable rates is to shop around to see what remortgage deals are available on the market. If you're interest is SVR, the odds are that there will be many more competitive deals on the market. However, note that some mortgage providers will tie in the borrower for a set period to the SVR, particularly if they have offered generous terms early on in the mortgage, such as a discounted rate or cashback.

As with all financial products, we would suggest that you seek advice from a trained professional before making your final decision. Please fill out our brief mortgage enquiry form and we will arrange contact with an Independent Financial Adviser (IFA) within 24 hours.