Standard Variable Rate Mortgage

Each lender has its own standard interest rate it charges for its mortgages, traditionally known as the ‘standard variable rate.’ This rate is usually higher than the Bank of England base rate, but follows its ups and downs, approximately. The many different lenders charge many different standard rates. For example, in April 2003, the lowest standard rate was 5.59% and the highest was 7.49%

The Advantages Of A Standard Variable Rate Mortgage.

1. It is likely that you wont have to pay any fees at all, such as a broker’s fee or an arrangement fee.

2. There are no early repayment charges (ERC) to pay, unless it’s a cash back deal. This means that you are free to switch mortgages when ever you like

The Disadvantages Of A Standard Variable Rate Mortgage.

1. A lenders standard rate is often more expensive than the special deals it offers.

2. The standard rate is variable; it is constantly rising and falling so you can’t predict what will happen to you rates, therefore your monthly repayments. Bare in mind that your lender has the power to change the rate when ever, although in reality, changes often occur after changes in the BBR.

3. Customers often complain that lenders are slow in passing on information about falls in the BBR, but amazingly fast to pass on any increases.

4. If you pay off your mortgage early, then you may be required to pay a standard redemption fee. These change from lender to lender, and can be as expensive as £210 to as little as £20, although on average you would expect to pay in the region of £70 to £90.


Call us now on 0800 316 9696 for advice on a standard variable rate.