What is a Variable Rate Mortgage ?

A variable rate mortgage is based on the lenders standard variable rate which will be linked to the Bank of England base rate. The lenders standard variable rate is generally affected by movement within the Bank of England's base rate. Standard variable rates vary from lender to Lender but are typically 1.5%– 3.5% above the bank of England base rate.

The standard variable rate is not guaranteed to rise and fall by the same rate that the bank of England base rate changes by. If you require this guarantee than a tracker rate mortgage may be more suitable for you.


Your home may be repossessed if you do not keep up repayments on your mortgage

Pros and Cons of Variable Rate Mortgages

Pros

  • Freedom to change mortgage provider at any time without a redemption penalty
  • When the Bank of England's base rate is falling you could benefit from any fall in your lenders standard variable rate

Cons

  • If the Bank of England base rate is rising this will could result in an increase in your lenders standard variable rate
  • Lenders do not always pass on the equivalent movement in the Bank of England's base rate
  • Budget ability is reduced

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