Variable Rate

Who should consider a Variable Rate mortgage
A Standard Variable Rate mortgage may well be suited to some borrowers but most agree that the deal can usually be bettered with a cheaper discounted deal.

For borrowers who don’t want to chop and change their mortgage, who want to go with one favoured lender for the full term of their mortgage they will be able to may decide that a lender’s Standard Variable Rate mortgage is for them but it may cost them more in the long run than if they took another kind of mortgage.

A house buyer who doesn’t want to miss out on rate falls in terms of savings and lower monthly payments can benefit from a Variable Rate mortgage but a Capped Rate mortgage for instance will still allow them to reap the benefits of interest rate drops but will also protect them from rate rises above the agreed capped rate. If the borrower isn’t concerned about rate rises, would be able to find the extra money and doesn’t want to shop around for the best deal in town the SVR will be the easiest to find.

No mortgage choice is ever completely straight forward and it will always depend on personal circumstances and preferences. One person’s fears will not necessarily be shared by another borrower and the possible pay backs of risk taking will be more attractive to some then others. That’s why there is so much choice in the mortgage market and so many options available.

Monthly budget planning is more difficult with Standard Variable Rate mortgages as borrowers never really know what the lender’s rate will be set at but for some house buyers this is less of a concern than to others.

As many discounted or other types of mortgage will eventually revert to the lender’s Standard Variable Rate mortgage it is well worth borrowers of those other types of mortgage investigating what the lender’s SVR is set at. If it is more than the current market rate of around 1.75%-2.0% and the discounted mortgage has a long tie-in then even those mortgages may prove expensive in the long run.