What is a standard variable rate mortgage?

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The standard variable rate (SVR) is a lender's normal interest rate without any discounts or deals. This interest rate is variable and can go up or down.

How does a standard variable mortgage work?

Every lender has a standard variable rate. You will be moved onto this once a mortgage deal has ended.
SVR mortgages are variable, so the amount you pay each month can go up and down, unlike a fixed rate mortgage.
If your lender raises its SVR, your monthly payments will increase. You’d see a reduction if the SVR comes down.
When you are on a SVR, you'll be able overpay by as much as you like, or pay your mortgage off early.

What are your options when you’re on a standard variable rate mortgage?

You have plenty of options if you’re on a SVR mortgage, or if you are about to finish you deal and move onto one. What you decide to do is down to you and your personal situation.

Stay there

Staying on the SVR can give you more flexibility, but may be more expensive than a fixed or tracker deal.

It can sometimes mean that you’re able to overpay by more than when you’re on a mortgage deal. You will also be able to pay your mortgage off before the end of your term.

Product transfer

Getting a mortgage with the same lender is called a product transfer. You can  move from the SVR to a new deal with the same lender, usually over the phone or online. 

Remortgage to a new lender

You could remortgage to a new lender. If you like having a variable element to your mortgage, you could get a tracker mortgage. 

A tracker mortgage tracks the Bank of England base rate so will go up and down in line with changes to the base rate. This means that if the base rate rises by 0.25%, your repayments will too.

Your lender will let you know when your payment changes and by how much.

If you want the security of knowing what your monthly payments will be for a certain amount of time, then a fixed rate might be better.

Standard Variable rate Mortgages and the Bank of England Base Rate

Your lender can change its SVR by any amount and at any time – and some lenders have higher rates than others. 
The SVR usually moves in-line with the Bank of England base rate. If the base rate goes up or down, lenders will often change their SVR shortly after.
The base rate is only one of several factors a lender will consider when setting its SVR. 
The content on this page is for reference and is not financial advice.
For impartial financial advice, try MoneyHelper.