Compare variable-rate mortgages

What is a variable-rate mortgage?

A variable rate mortgage is one where the amount of interest you are charged can go up and down. This means your monthly repayments may be different each month. They’re an alternative to fixed-rate mortgages, where your interest charge is guaranteed to stay the same for a period of time, usually one, two, three, five or 10 years.

There are three main types of variable rates: Standard Variable Rates (SVRs), discount-rate mortgages and tracker mortgages. The type you have will determine how your interest rate changes over time. 

For instance, tracker mortgage rates are usually linked to the Bank of England’s base rate. SVRs are set by the mortgage provider, who can decide how and when to change them. Discounted rates are often based on the SVR, but are cheaper. 

What is SVR?

SVR stands for standard variable rate. This is set by your mortgage lender, and different companies have different rates. The bank or building society decides how and when to put the rate up or down – based on a number of factors.

These rates are not explicitly linked to the Bank of England’s base rate, although they might be influenced by it. Other factors that might contribute to the provider changing your interest rate include the lender’s cost of borrowing, regulation and internal targets.

If you took out a fixed or tracker deal that has come to an end, you are usually switched onto the lender’s SVR. Often these are the most expensive options available, so it can be worth switching to another offer instead. However, there are benefits to SVRs including flexibility and the ability to overpay your mortgage.