What are Variable Rate Mortgages?

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Types of Mortgage:: Variable rates Mortgages: - mortgage payments are calculated by your lender on the so-called "Standard Variable Rate". This is based on the monetary "base rate" that is reviewed monthly by the Bank of England.
What Happens During The Mortgage Application Process?: The mortgage application process, once underway, does not take very long. Once you have decided to go with a certain lender and signed a purchase contract, the lender will run a full credit check verifying your income, liabilities and your ability to repay the loan.
Unusual Properties: What happens if I have an unusual property?
What Are The Different Ways You Can Pay Off a Mortgage?: Capital & Interest - otherwise known as a repayment loan. The borrower pays an amount each month to cover the amount borrowed and the interest charged on that.
What are 100% Mortgages?: Most mortgage lenders will only offer a 90% loan to value, that means that they will only loan you 90% of the properties value. First time buyers find this particularly problematic because they need to save up there 10% of the properties value before they can complete on their mortgage.

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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