What is the Standard Variable Rate?

What is SVR?

The Standard Variable Rate (or SVR) is the rate of interest set by each individual lender. The lender has control over these rates and whilst they are often based on the Bank of England base rate, there can be a variety in the rate, particularly if the lender is classed as a specialist lender.

These often come into play when you reach the end of your introductory period on your fixed, tracker, or discount mortgage deal.

An Example of SVR

(Example rates based on averages for 2020)

If you sign up for a mortgage on a fixed rate of 2.6%,  you’ll know that your monthly payments will be the same each month.

At the end of your introductory period, whether that’s 2,5 or 10 years down the line, you will fall onto the lenders SVR.

At this point, the monthly repayment amount may change. If their SVR rises, you’re monthly payments go up. Similarly, if it goes down, so will your repayments.

This is the risk involved in slipping onto your lenders SVR. There is no guarantee that your monthly repayment will be the same.

What to do if you’re on the SVR?

The great thing about being on an SVR is that often you have fallen onto this from a fixed rate – so you’ve been approved for a mortgage before.

Obviously things do change, and over the course of a mortgage term wages, credit scores and outgoings will have their ups and downs.

Often, you will find that you will have a wider range of options thanks to payments made towards your existing mortgage and an improved LTV (Loan-To-Value).

We recommend speaking to a mortgage advisor to help you with your remortgage (we even offer free mortgage MOTs to help you see if there are savings to be made). On average, homeowners who have fallen onto the SVR on their current mortgage, save hundreds of pounds by remortgaging.