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.
