Leanne Macardle

Leanne Macardle

Editor
Published: 29/01/2019

At a glance

  • SVR means 'standard variable rate'.
  • You will revert to SVR when your initial mortgage deal ends and have not remortgaged to a new deal.
  • SVR rates are usually higher than a mortgage deal set over a period of time.

A standard variable rate (SVR) is a type of mortgage interest rate that you are most likely to go onto after finishing an introductory fixed, tracker or discounted deal.

Some lenders will also let you take out a mortgage on their SVR, but this is usually the most expensive option.

How does a standard variable rate work?

An SVR mortgage means your payments can go up or down according to changes in interest rates. 

Unlike tracker mortgages, SVRs do not track above the Bank of England Base Rate at a set percentage. Instead, the rate you pay on an SVR mortgage will be determined by your mortgage lender. So, if the Bank of England Base Rate went up by 1%, your lender could choose:

  • Not to increase the SVR.
  • To increase the SVR (they could choose to increase this by any amount less than 1%, 1% exactly or even make an increase greater than 1%).
  • To decrease the rate (although this is certainly the least likely of the three options!).

Mortgage lenders can also increase or decrease their SVR at any time – not only after Base Rate changes.

When on an SVR mortgage, you won't normally have to pay an early repayment charge if you want to pay off your mortgage sooner or remortgage to a new deal. However, SVRs can be quite expensive – certainly more so than the best tracker rate mortgages available.

Pros and cons of standard variable rate mortgages

  • May be no early repayment charges, giving you the flexibility to overpay, pay off the mortgage early, or remortgage to a new deal.
  • Arrangement fees for SVR mortgages tend to be lower than for trackers or fixed rates. There may be no arrangement fee charged at all.
  • If interest rates are low, then your repayments could go down.
  • SVRs are often the most expensive mortgage rates available, so you may be paying more than the best tracker or discounted rate mortgages around.
  • If interest rates go up, so will your payments.
  • Your mortgage will default to an SVR after any initial offer rate ends and if you don’t remortgage, your monthly payments are likely to rise significantly.

Moneyfacts tip

Moneyfacts tip Leanne Macardle

Standard Variable Rate is a mortgage without any bells or whistles so it’s likely there are better deals out there – If you are on an SVR its’ probably a good idea to start investigating a new mortgage deal.

Mortgage calculator

Our mortgage calculator helps you to see how much your mortgage might cost you each month.

Our how much can I borrow calculator gives you a range of how much a lender might consider lending you under a mortgage. This calculation is only an indication only.

Read our How much can I borrow for a mortgage guide to find out more about what can impact your potential sum of borrowing.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

paper with question marks in clear jar

At a glance

  • SVR means 'standard variable rate'.
  • You will revert to SVR when your initial mortgage deal ends and have not remortgaged to a new deal.
  • SVR rates are usually higher than a mortgage deal set over a period of time.

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