In a Standard Variable Rate (SVR) mortgage, the borrower’s monthly repayments are based on the prevailing rates of interest their lender charges and not the Bank of England (BoE) base rate. In other words, it is entirely the lender’s decision on the rate of interest they charge the borrower.
Although the rate of interest charged in an SVR mortgage can be heavily influenced by changes in the Bank of England base rate. Whenever the bank raises or lowers the base rate, the lender can do the same, or ignore the change altogether. On occasions, the lender may increase or decrease their rates of interest even if the BoE has not changed theirs. The difference between a lender’s standard variable rate and the Bank of England base rate varies by lender and over time.
As SVR mortgages do not involve any special financial inducements, they can be more (or less) expensive than other types of mortgages. And unlike fixed-rate mortgages where the interest rate stays the same during the agreed fixed-rate period, SVR borrowers can never be certain when their monthly repayment may change.
Arrangement fees and early repayment charges depend on the specific product terms. Some SVR mortgages may not carry an early repayment charge, but this varies by lender and product. Check the terms of any mortgage before proceeding.
Your home may be repossessed if you do not keep up repayments on your mortgage.