Variable Rate Mortgage Disadvantages

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 Disadvantages

Get a Free Quote Disadvantages of Variable Rate mortgages
The Variable Rate mortgage will almost always not be the best deal that you can get when looking for a mortgage. Thatís true across lenders but itís usually also true from the same lender. First time buyers who are unsure of the mortgage market may be attracted to the dependable, solid image of the Standard Variable rate mortgage but with very little effort they will be able to find better deals.

Bank of England Base Rate Increases
The main disadvantage to the Variable Rate is the spectre of large Bank of England base rate increases, which will be almost instantly reflected in the lenderís standard lending rate which in turn knocks on to the increase in monthly payments for the borrower. Itís not possible to judge when these rises are going to occur so for borrowers who donít have the contingency of affording a rise in their monthly out-goings it can be a big worry. It is also not possible to predict just how high the rates may go, even if recent history gives a guideline it can only ever be that.

SVR Is A Mortgage Than Can Be Bettered
Itís fairly obvious that high-street lenders wouldnít revert discounted mortgage rates to the Standard Variable Rate if it didnít make them money and that is perhaps the clearest indication that the SVR is a mortgage than can be bettered, usually even with the same lender.

Always Investigate
In the world of mortgages the relatively small differences in percentages over the lifetime of the loan can add up to large amounts of money. Thatís why itís worth paying attention to the details and small print of your mortgage. The lenders are in the long game, they have many borrowers over many life-times and so they are careful and business like about the offers that they promote. The SVR mortgage is their long-term banker that will always make them money so itís wise to investigate how you can save yourself money Ė because the offers will be there if you look.

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