Variable-rate mortgages
Find the right variable rate mortgage for you
What is a variable-rate mortgage?
A variable rate mortgage is a home loan where the interest rate can rise or fall over time, so your monthly repayments change too. This is different from a fixed-rate mortgage, where the rate stays the same for a set period.
There are three main types of variable rate mortgage:
Standard variable rates (SVRs) – set by your lender and can change at any time
Discounted mortgages - a discount off your lender's SVR for a set period
Tracker mortgages – follows the Bank of England’s base rate, so it moves when the base rate moves
Standard Variable Rate Mortgages (SVRs)
A standard variable rate mortgage is the default interest rate your mortgage lender sets, and it can go up or down at their discretion. Each lender has their own SVR, and they’re free to change it whenever they like.
While the SVR isn’t directly tied to the Bank of England base rate, it often moves in response to changes in it. Lenders may also adjust their SVR based on things like changes to their own borrowing costs, new regulations, or internal business decisions.
If you're on a fixed, tracker, or discount mortgage, you'll usually be moved onto your lender’s SVR once your deal ends, unless you choose to remortgage.
SVRs are often the most expensive mortgage rates available.
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Is it worth getting a variable rate mortgage?
It depends on your situation. A variable rate can suit you if you can absorb rate rises, want flexibility to overpay or leave without fees, or expect rates to fall. If you need certainty over your monthly budget, a fixed rate is usually safer.
What are variable mortgage rates today?
Variable rates differ by lender and by type - SVRs are typically the highest, while tracker and discount rates are usually lower but still move with the market. Speak to a broker or check your lender's website for today's rate, as these change frequently.
Will mortgage rates drop to 3% again?
This depends on Bank of England base rate decisions, which are reviewed roughly every six weeks. No one can guarantee future rates, but tracker mortgage holders benefit automatically if the base rate falls, while SVR holders depend on their lender choosing to pass on any cut.
What are the advantages and disadvantages of SVR mortgages?
Variable-rate mortgage FAQs
Who is offering the best variable mortgage rates?
Rates vary by lender and change frequently, so the 'best' rate depends on your deposit size, loan-to-value, and circumstances. A broker, like Mojo Mortgages, can compare live rates across the market for you.
Which bank has the lowest SVR?
SVRs vary significantly between lenders and change at their discretion, so there's no single 'lowest' - it's worth checking your own lender's SVR page directly, as this isn't something we can state reliably here without it going out of date.
How long can I stay on a variable rate mortgage?
There’s technically no limit to how long you can stay on a variable rate mortgage, especially if you’re on your lender’s SVR. But long-term, it’s rarely the cheapest option.
Tracker and discount mortgages usually last 2 to 5 years, though some lifetime deals are available. If you’re unsure what’s best, a mortgage advisor can help find the most appropriate deal for your circumstances.
What are mortgage collars and mortgage caps?
A mortgage collar, also known as a “floor” means that the rate will never fall below a certain level. For instance, if your tracker mortgage follows the base rate, the lender might say that the interest rate will never drop below 0.25% – even if the base rate drops to that level.
A mortgage cap is the opposite and means that your interest rate will never rise above a certain level, even if other financial indicators do. Caps are far rarer than floors.
What happens when my variable rate mortgage deal ends?
If your tracker or discount mortgage deal ends you will be automatically moved to your lender's standard variable rate. This means your repayments will go up if the SVR is higher than your offer rate. You can choose to shop around and switch to another deal, which should keep your costs lower.
Can I pay off my variable rate mortgage before the term ends?
If you’re on the SVR, you can pay off your mortgage fee-free. If you have a tracker or discount mortgage, most providers charge you if you repay or switch to a cheaper deal before the term ends. However, people on lifetime tracker deals usually escape early repayment charges.
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