Variable Rate Mortgages explained - Apply for a Variable Rate Mortgage

Variable Rate Mortgages

Variable Rate Mortgages allow your mortgage lender to set the rate of interest. The variable rate is based on the Bank of England’s base rate and is typically around 2% to 4% higher, although every lender will have a different policy.

Should I choose a variable rate mortgage?

A variable rate mortgage offers some of the best deals available on the market, but choosing a variable rate mortgage is a gamble, firstly the scheduled rise in interest rates is something to take into account, which is currently making fixed rate mortgages more attractive. Because variable rate mortgages change in line with interest rates it is hard to know what your future repayments will be, making it difficult to budget. Also you should be aware that a variable rate mortgage does not necessarily move as quickly as the Bank of England’s rates, as it is set by the lender, so equivalent savings may not be passed on.

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What are the advantages of a variable rate mortgage?

If the Bank of England’s base rate is low, your monthly interest repayments will also be low. With the variable rate you can change lenders when you like without being charged or penalised.

What are the disadvantages of a variable rate mortgage?

If the Bank of England’s base rate is high, your monthly interest repayments will also be high. If you have a fixed rate mortgage for a particular period, once the period ends you will change to the SVR. This could mean you have to pay higher payments than with the fixed term until the mortgage has been paid in full. If your moving home and are looking for a Conveyancing Solicitor then click here

How can I get the best variable rate mortgage deal?

If you are interested in choosing a variable rate mortgage then you should compare different quotes available from different mortgage providers, be wary of any mortgage lender whose variable rate is considerably higher than others as they tend to be similar. When looking at their quotes be aware of arrangement and redemption fees. To get the cheapest mortgage deal possible you should be aware of your credit history and if you have a larger deposit you will be able to negotiate for the best possible mortgage deal.

If your moving home and are looking for a Conveyancing Solicitor then click here