Guide to Standard Variable Rate Remortgages

Len Burgess[1]

Len Burgess

Money Savings Advice guide to variable rate remortgages

Most people on their mortgage lender’s Standard Variable Rate will benefit from moving elsewhere. Whether you remortgage with the same provider or find a better mortgage somewhere else, you’ll almost certainly save money by considering your other options.

A Standard Variable Rate (SVR) mortgage is the default variable mortgage offered by most banks. It is usually the most expensive option, and you will default to the SVR if you let a mortgage deal run out.

In most cases, the Standard Variable Rate (SVR) is the most expensive mortgage deal you’ll get. If you’re on a Standard Variable Rate, you can look into remortgaging. SVR mortgages aren’t as restrictive, so you can remortgage at any time.

Read on to learn more about Standard Variable Rate remortgages, and how moving your mortgage could save money.

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What Is a Standard Variable Rate (SVR) Mortgage?

A Standard Variable Rate is a type of variable mortgage, where your interest rates will rise and fall during your mortgage term. This means that you’ll pay different amounts every month. Your mortgage rates can fluctuate several times a year, making an SVR mortgage unpredictable.

There are several different types of tracker or variable mortgages, all with different features and benefits. The Standard Variable Rate is just one of these, with more drawbacks than it might have benefits.

The Standard Variable Rate is a mortgage lender’s default and is usually their most expensive product. If you’re on a different mortgage deal and come to an end, you’ll be moved to the Standard Variable Rate automatically. This is like the withdrawal of an introductory offer and could lead to a surprising price hike.

Mortgage lenders usually rely on their customers being apathetic, losing track of dates or not making an effort to remortgage since this means that they’ll get more money from homeowners. It’s wise to look into all your other options, getting away from the SVR as soon as you’ve got the opportunity.

According to research in the past couple of years, more than a third of homeowners have let themselves lapse onto an SVR mortgage. Consider whether it’s time for you to look at a new deal to get the best out of your money.

Why Consider Standard Variable Rate Remortgages?

If you’re on the Standard Variable Rate, you’re likely paying more than you need to. There are so many alternatives, including discounted rates and mortgages with interest rate caps. You might like a tracker mortgage, with rates that rise and fall or could prefer a fixed-rate mortgage with identical payments each month.

Whatever option you look at, there’s a high chance that you’ll pay less if you get away from the Standard Variable Rate.

Look at the products offered by your current mortgage provider. You’ll likely find that their SVR mortgage is the most expensive one they offer. This is usually the same wherever you go, so take some time to consider other options.

How Easy Is It to Remortgage?

Fortunately, it’s easy to remortgage away from the Standard Variable Rate. One of the biggest benefits of an SVR mortgage is that it’s normally free from early repayment penalties. Once you’ve been moved onto a Standard Variable Rate, you’re usually free to remortgage at any time.

This is in contrast to other mortgages, where early repayment charges can add thousands to the cost of remortgaging.

If you’ve had an existing mortgage deal that’s come to an end, don’t worry that you’ll miss your opportunity. Whilst you’ll usually save more by remortgaging quicker, there’s no need to rush your decision.

Taking a bit longer to choose a new mortgage doesn’t mean that you’ll be locked into a contract with your current provider. You may also have other factors that make you wish to delay your decision – whether that’s a promotion on the horizon at work or a change to your credit score that you know is imminent.

Staying on a Standard Variable Rate

Most people wouldn’t remortgage to a Standard Variable Rate, but if you’re already on it, you might choose to wait longer before you look to remortgage elsewhere. Whilst they’re typically expensive, SVR mortgages are more flexible than most. As you can move at any time, you don’t need to feel under pressure.

You might choose to stay with an SVR mortgage for a while, perhaps because you know that your financial circumstances are due to change in the near future. Avoid remortgaging too early if your property value is likely to change very soon, or if waiting a few months could do great things for your credit score.

Many people find it hard to decide when it is right for remortgaging. Being on a Standard Variable Rate could give you more time to get into the strongest position, but don’t be afraid to take the plunge once you’ve found a mortgage deal that looks right for you. Otherwise, you could be throwing money away needlessly.

Next Steps on a Standard Variable Rate Mortgage

If you don’t make a move to remortgage once another mortgage term runs out, then you’ll usually be switched to the Standard Variable Rate automatically. If remortgaging costs seem too high at first, you can stay on this rate for a while. Just remember that this is an expensive option and could cost you much more long term.

Terms and Conditions of a Standard Variable Rate

Since a Standard Variable Rate often comes with flexibility, you might be happy sitting for a while and seeing what the future might hold. Always check the terms and conditions to make sure that you’re happy with your choice. Not all Standard Variable Mortgages are completely free of repayment charges, so before you’re switched to this rate automatically, you’ll want to look for any hidden costs.

Don’t assume that every SVR mortgage is free from early repayment fees. You could regret not checking when you eventually decide to remortgage. If fees and charges feature in the terms and conditions, you may decide to remortgage as soon as your previous mortgage deal ends.

Fluctuations in the Standard Variable Rate

The cost of a Standard Variable Rate mortgage can change and fluctuate frequently. These changes may be influenced by the Bank of England Base Rate, though could also be changed by your lender according to their commercial interests. If your lender needs a bit of a boost, they might raise your mortgage interest rate. If they can afford to bring it down, they might drop the rate for a little while.

A Standard Variable Rate is somewhat unpredictable, which makes it hard to keep a monthly budget. Keeping a record of recent interest rate changes can help you to look for better deals, comparing prices with other mortgages offered by your lender and competitors.

Standard Variable Rate Remortgaging Options

There are so many alternatives to the Standard Variable Rate. When you want to remortgage, the choice can be simply overwhelming. You might also struggle to know when to remortgage and might worry about timing it right. Even when you know that you need to remortgage, there are many factors to consider.

Make sure that you’re happy with the move you plan to make since there’s very little risk of waiting a few months if you’d like some more time to make your choice.

How Can Money Savings Advice Help You With A Remortgage?

Here at Money Savings Advice, we have partnered with some of the UK’s leading mortgage brokers. They have already helped thousands of people get the best remortgage deal and they can do the same for you.

Choosing an independent adviser means they won’t recommend a mortgage unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.


Money Savings Advice Author Len Burgess

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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