Variable Rate Mortgages

The standard variable rate is the general rate of interest that lenders use and it's usually the most expensive option for the borrower. The standard variable rate is linked to the Bank of England's base rate and moves up and down in line with it, and a typical rate at the moment is about 1% to 2% higher than the base rate. So whenever there is a base rate change, you'll know your mortgage rate is probably about to go up or down by a similar amount. If you're on this sort of standard rate, you'll probably notice that lenders like to introduce any increase with effect immediately and to delay any cuts by a month or two. It's never going to be the cheapest deal on the market so if you find you have opted for a standard variable rate mortgage, be aware that you're effectively subsidising all the other borrowers who are taking advantage of any cut-price special offers!

There are a number of options for you to think about if you don't want to opt for a fixed rate because you think the base rate is about to fall.  There are discount mortgages offering lower than normal rates for a fixed period of time but still linked to the base rate.  Check that there is no lock in period at the end of the discount before you opt for one of these.  There are also tracker mortgages where you can ensure that your rate is pegged much more closely to the base rate and capped mortgages, where the lender guarantees not to charge you more than a certain APR, but your rate will still fall in line with the standard variable mortgage rate if it is lower than the capped mortgage rate.

You can find some great UK mortgage offers here on this site.  Just click on the links on the left hand side to find out more!