What is a Variable Rate Mortgage?
A variable rate mortgage, often called a Standard Variable Rate (SVR) mortgage, has an interest rate that can change at your lender's discretion. Unlike tracker mortgages which follow the Bank of England base rate, SVRs are set by individual lenders and can move independently of official rates. When your fixed or tracker deal ends, you'll typically move onto your lender's SVR, which is usually higher than introductory rates.
SVRs are typically the most expensive mortgage option, with rates often 1-2% higher than the best fixed or tracker deals. For homeowners looking to remortgage, moving off an SVR can result in significant monthly savings. Even a 1% reduction on a £200,000 mortgage could save you over £100 per month.
Why You Should Consider Remortgaging Off Your SVR
If you're currently on your lender's SVR, you're almost certainly paying more than necessary. Lenders don't typically offer their best rates to existing SVR customers - these are reserved for new business. By remortgaging, you can access competitive deals and potentially save thousands of pounds over the life of your mortgage.
The remortgage process is straightforward and often free of charge if you work with a broker. Your new lender may even cover legal fees and valuation costs. Start looking for a new deal around 6 months before your current fixed or tracker rate ends to avoid falling onto the SVR at all.
When Might an SVR Make Sense?
While SVRs are generally more expensive, there are rare situations where staying on one might suit you. If you're planning to move home or pay off your mortgage within a few months, avoiding a new fixed rate with early repayment charges could be sensible. SVRs also offer complete flexibility - you can usually overpay without limits or move without penalties.
However, for most borrowers, the higher cost of an SVR far outweighs these benefits. Our advisors can help you calculate whether switching to a new deal makes financial sense in your situation.
Compare SVR Alternatives Today
Don't stay on an expensive SVR longer than necessary. By comparing deals from over 100 UK lenders, our FCA-regulated brokers can find you a better rate and handle the remortgage process from start to finish. Fill in our form for a free, no-obligation quote and see how much you could save.