The monthly mortgage repayment is the biggest expense in most household budgets. By avoiding the standard variable rate, first time buyers and re-mortgage customers can save money and reduce the impact of interest rate rises. The range of packages may appear confusing. But in a glass-half-full view of the world this means there is more chance of finding a money-saving mortgage deal you'll like.
Standard Variable Rate or SVR is the default mortgage interest rate a mortgage lender charges borrowers. For default, also read 'highest'. If you are paying SVR then you are almost certainly paying more than you need to.
SVR usually moves up and down with the Bank of England base rate. However there is no guarantee that lenders will pass on the benefit quickly (or indeed at all) from a fall in base rate Even if they do, it is unlikely to be passed on as quickly as a rate rise.
A call to your current lender telling them you are thinking about switching could result in them offering you a better deal. But to make sure you are saving as much money as possible, compare any offer with deals available for re-mortgage customers from other lenders.
Discounted Rate mortgages offer a discount off the lender's SVR for a fixed period of time. These can offer the lowest up front monthly payments. But because these deals track the ups and downs of the base rate, you need to be confident that your budget can accomodate increased monthly payments should interest rates go up. And no, we can't tell you how much of a rate rise to budget for. Or this week's lottery numbers either.
If you need more information to decide which mortgage is the best for you, then check out
TheRateTart Guide to Mortgages.
If you need more information to decide which mortgage is the best for you, then check out
TheRateTart Guide to Mortgages. Please note that the information on this web-site is intended to provide an overview of the different types of mortgage available. Nothing on this website should be construed as advice and you should not make your mortgage decision based solely on this information.
TheRateTart recommends you consult an independent mortgage advisor to help identify the most suitable mortgage for your needs.
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