Variable Rate Mortgage Advantages

Variable Rate

Variable rate mortgages are, in the simplest terms, mortgages that allow for the interest rate to rise and fall during your loan term.

Mortgage Advantages

Get a Free Quote Advantages of Variable Rate mortgages
One advantage of the Standard Variable Rate mortgage is that it does allow reduced payments when the Bank of England rate falls as long as the fall is reflected in the lenderís rate. That can mean an unexpected windfall in terms of savings and of course that can only be a good thing.
Good Deal Available
The Standard Variable Rate mortgage will be offered by almost every possible mortgage lender so the choice is wide and borrowers can shop around for a good margin above the Bank of England rate. If a borrower has a preferred lender then they will almost certainly be able to find a Standard Variable rate mortgage from that lender. Not every borrower wants to be bothered with comparing lots of lenders and doing that leg-work even if it will save them money in the long run.

Low Lender Risk
The Variable Rate mortgage offers little risk to the lender as they are protected against sudden rises in the Bank of England rate which they are not protected against in a Fixed Rate and therefore in some circumstances it may be offered at a cheaper rate than a Fixed Rate. This is not usual and will very much depend on the lender and the prevailing interest rates. If the Fixed Rate is low enough and the Bank of England rate starts moving upwards then the Variable Rate loses its attraction.

Poor Credit History Availability
The Variable Rate mortgage also has the advantage that for borrowers with a poor credit history who may find it difficult to obtain a mortgage that Variable Rate mortgage may be on offer from some specialist lenders and as such will allow then to buy a home when they could not do it otherwise. However, the rate that these lenders will set their SVR above the Bank of England rate is likely to be much higher than the high-street lenders as they are taking on a higher risk.

Summary
The Standard Variable Rate mortgage is the no-nonsense, basic, easy to find mortgage that all lenders will promote because it will generally carry little risk for them against the bank of England rate. The lender is always making around 2% more than the base rate so they will always structure other discounted mortgages so that they revert to the SVR when they finish their discounted period. If a discounted mortgage carries a long tie-in to the SVR it may work out as not being as good a value as first thought.

Online Mortgage Enquiry and Quote

Online Enquiry...

If you would like to receive a quote for a mortgage from a broker please
Click here...

Mortgage Calculator

Calculate

Typical Interest Payments

First Time Buyers

2.89%

Purchased Fixed

2.89%

Discounted Rate

2.99%

Buy To Let

2.99%

Commercial

3%

 

 

Affordability Calculator

Calculate
Get a Mortgage Quote

Mortgage News Feed Mortgage News Feed

Questions & Answers

Read about general questions asked by brokers and lenders and the best ways to answer...

Mortgage Glossary

Search for terms beginning with the letter:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z