Learn about how a standard variable rate mortgage (SVR) works and its implications for your financial planning.
A standard variable rate mortgage (SVR) is a type of home loan where the interest rate is set by the lender and can change at any time. This type of mortgage offers flexibility but comes with the uncertainty of variable monthly payments.
With an SVR mortgage, the interest rate is not tied to any specific external rate, such as the Bank of England base rate. Instead, it is determined by the lender. This means that your mortgage rate can change at the lender’s discretion, potentially at any time. Factors influencing changes can include economic conditions, changes in the Bank of England base rate, or the lender's business strategy.
SVR mortgages do not have a fixed term for the interest rate. Instead, you remain on the SVR for as long as you have the mortgage, unless you switch to a different mortgage product or lender.
When the initial fixed or discounted rate period of your mortgage ends, you will usually be moved onto the lender’s SVR automatically. This can result in a significant increase in your monthly payments if the SVR is higher than your previous rate. It's advisable to explore new mortgage deals and consider remortgaging to secure a more favourable rate before this transition occurs.
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While SVR mortgages offer flexibility, they come with the uncertainty of variable interest rates and payments. For personalised advice and to explore more stable and potentially cost-effective mortgage options, contact our expert team at Empreso Private Clients. We are here to help you navigate the mortgage market and find the best solution for your financial situation.