What is a Variable-Rate Mortgage?

A variable-rate mortgage is a type of loan where the interest rate can change over time. This means your monthly payments may fluctuate based on the lender’s policies or economic conditions, often influenced by the Bank of England’s base rate. Many borrowers hope to see rates decrease, which can lead to lower monthly payments!

Here are some common types of variable-rate mortgages:

- Tracker Mortgages: These follow the Bank of England’s base rate. Whenever the base rate changes, your mortgage rate will change as well! Tracker mortgages typically have a fixed term, after which they may switch to the lender’s standard variable rate (SVR).

- Standard Variable Rate (SVR): This is set by your lender and can change independently of the base rate. SVRs are usually a bit pricier, and you typically move to this rate once your fixed-rate or tracker mortgage period is over.

- Lifetime Tracker Mortgages: As long as your mortgage lasts, these loans follow the base rate, often with minimal or no early repayment fees.

What’s Great About Variable-Rate Mortgages? They often come with lower rates and fees compared to fixed-rate loans, giving you more flexibility and the chance to enjoy reduced payments when interest rates go down.

Keep in Mind. The flip side is that variable rates can be unpredictable. If interest rates rise, your monthly payments might increase, which can be a bit stressful for your budget.

Before diving into any variable-rate product, it’s a good idea to think about how a potential rate increase might affect your budget. A chat with a mortgage adviser can really help you explore options that strike the right balance between flexibility and affordability.

If you're on a Standard Variable Rate (SVR), you might enjoy the freedom to switch without penalties, but keep in mind that SVRs can add up in cost.

If you’re interested in chatting with a friendly, qualified adviser, just give us a call at 0800 211 8700. We can search the whole of market on your behalf to find a great deal for you.