What are Variable Rate Mortgages?
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- Conveyancing is the name of the legal process of transferring ownership from the seller to the buyer.
- Where Can I Buy a Mortgage?
- Many, but not all financial services companies offer mortgages. If you are looking for a mortgage the traditional approach is to speak to you bank or a building society. However, you are most likely to find the cheapest deals by speaking to a Mortgage Broker.
- The Mortgage Glossary
- APR - This stands for Annual Percentage Rate and should be used to compare the costs of credit.
- How Do I Know If I Should Switch Mortgages?
- The mortgage market changes on a regular basis – and it is quite possible that just a few years after taking out your mortgage there will be plenty of better deals out there with more favourable interest rates.
- What is Adverse Credit?
- If a borrower has a history of poor credit usage then this is described as Adverse Credit, Sub Prime or just simply, Bad Credit. Poor Credit history can include County Court Judgements (CCJ's), Bankruptcy, Mortgage arrears or any late payments on credit cards, credit arrangements etc.
A variable rate mortgage is when you pay a standard variable rate (SVR) that changes in line with the Bank of England's base rate. The SVR is usually between 2% and 4% higher than the Bank of England's base rate, but this will vary from lender to lender.
The obvious advantage is that when the Bank of England’s base rate is low, your monthly mortgage interest repayments will be low, however if interest rates rise you will have to make larger monthly repayments. Because you can’t predict the monthly cost of the mortgage in the long term, it could cause financial concerns for some. Another advantage is that you can initially get a lower interest rate on variable interest rate than on a fixed rate mortgage.
A standard variable rate is most suitable for people who like to shop around to get the lowest interest rates, taking advantage of the ability to re-mortgage regularly. Variable rate mortgages do not charge redemption penalties so you can switch mortgage lenders with no extra charges.
All fixed, capped and discount mortgages revert to the variable rate mortgage when the introductory period comes to an end.
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