What is a standard variable rate?

Home Mortgages Guides What is a standard variable rate?

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.

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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.

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

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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.

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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.

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A mortgage broker specialises in finding mortgage lenders who will meet your needs for a mortgage. They do this by providing you with advice and recommending the mortgages most suitable for you. They will then manage completing your mortgage application.

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive rates.

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What income can I use for a mortgage application?

To get an accurate affordability check you'll want to know what counts as income, so you can declare everything you have to offer. Our helpful guide explains.

Should I use a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive rates.

Mortgage valuations are not in-depth surveys

For a more comprehensive evaluation of a property, you should choose a home buyer report or the more detailed full structural survey. Our helpful guide explains the differences.

For a more comprehensive valuation of a property, you should choose a home buyer report or a detailed structural survey. Our guide explains the differences.

Pay your mortgage off early in 5 steps

Read our five tips to repay your mortgage early - even a small change can make a big difference to becoming mortgage free sooner.

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