Variable Rate Mortgages

Standard variable rate

A standard variable rate mortgage is a popular choice for many borrowers, as it offers the potential to save money if the Bank of England’s base rate is low. This type of loan is linked to the Bank of England’s base rate, which is determined by the Monetary Policy Committee and is subject to change. As a result, the interest rate charged on the loan will move in line with the Bank of England’s base rate. This means that if the base rate increases, the borrower’s payments will also increase.

When looking for a standard variable rate mortgage, to speak with a qualified mortgage broker to find for you the most suitable product, as the terms can differ between lenders. It is also important to consider the risks associated with a variable rate mortgage, as the payments are subject to change depending on the Bank of England’s base rate. Therefore, borrowers should ensure they have the financial security to cover any potential increases in payments. 


Variable Rate Mortgage Calculator

If you’re looking to take out a mortgage, you may have come across the term ‘variable rate mortgage’. This type of mortgage has an interest rate that can change over time, usually in response to changes in the Bank of England’s base rate. Whilst variable-rate mortgages can offer a lower initial rate than fixed-rate mortgages, it may end up costing more over the long term due to potential rate rises. 

Luckily, you can use MortgageTek mortgage calculator to help you work out the likely costs of a variable-rate mortgage over its term, as well as the potential differences in costs between a fixed-rate and a variable-rate mortgage. It can also help you to compare the cost of different variable rate mortgages so that you can choose the best one for you. Furthermore, you can use our variable rate mortgage calculator to help you work out the impact of making overpayments or paying off the mortgage earlier than scheduled.

Variable Rate Mortgages Calculator

 Disclaimer: Please note that the results generated by this calculator are for general estimation purposes only and may not be entirely accurate. For precise information call us 020 3827 8558


What is the standard variable rate?

A variable rate mortgage can change over time, with the most common type being the Standard Variable Rate (SVR) mortgage. This is the interest rate lenders charge on mortgages, usually based on the Bank of England base rate. However, lenders can also set their own SVR, which usually results in a higher rate than the current base rate.

With an SVR mortgage, borrowers are offered more flexibility as the interest rate can go up or down depending on the lender’s discretion. While this type of mortgage does offer more flexibility, it is typically more expensive than a fixed-rate mortgage so it is important to consider all of the options available before making a decision.

It is also important to remember that the SVR rate can change at any time, so it is worth keeping an eye on the current market rate to ensure that you get the most competitive rate for your mortgage.

Moving to a standard variable rate? What happens when you are on SVR?

Variable-rate mortgages can be attractive for those looking to save money on their mortgage payments. With a variable rate mortgage, you are not tied to a fixed rate and can benefit from any rate reductions that occur in the market. Once your initial deal period has expired, you will be moved to your lender’s standard variable rate (SVR). This is typically higher than the initial fixed rate, so you may see an increase in your mortgage payments each month. The SVR rate is set by your lender and can be subject to change. It is important to keep track of any rate changes on your SVR mortgage and consider whether you could get a better deal by switching to a different product. Reviewing your options regularly can help you save money as you can switch to a fixed or tracker rate. This could mean lower monthly payments and more money in your pocket each month.

How a Variable Rate Mortgage Works

A variable rate mortgage is a type of home loan that is linked to an external index, such as the Bank of England base rate. This means that the interest rate on a variable-rate mortgage can go up and down according to the movements of the external index, so the payments can also go up and down. This can be beneficial to borrowers who are able to make the most of lower interest rates when they occur, as it provides more flexibility when it comes to budgeting. With a variable-rate mortgage, borrowers can usually make overpayments, and underpayments and take payment holidays. This can be attractive to borrowers who are looking for ways to manage their payments better or to reduce the amount of interest they pay overall. However, borrowers should be aware that their payments can go up as well as down and that they should plan accordingly.

Example of Variable Rate Mortgages: Adjustable Rate Mortgage Loans (ARMs)

Variable-rate mortgages are an attractive option for many borrowers, offering the potential to save money if interest rates go down and the flexibility to move or refinance in a few years. A Variable Rate Mortgage (VRM) is a type of loan in which the interest rate can vary over the course of the loan, typically in the form of an Adjustable Rate Mortgage (ARM). ARMs are usually offered for a period of 5, 7 or 10 years and feature a low ‘teaser’ rate at the start of the loan. This low rate can attract borrowers, but this rate generally rises after a few years. As such, ARMs can be a good option for borrowers who plan to move or refinance in a few years and want to take advantage of potentially lower interest rates. However, ARMs also come with the risk of higher payments if interest rates do go up. Borrowers should always consider their current financial situation and future goals before deciding whether an ARM is the right choice for them. It is important to speak to a financial advisor from MortgageTek if you are considering an ARM, as they can provide guidance and advice on whether this type of loan is suitable for your individual circumstances.

Why Are ARM Mortgages Called Hybrid Loans?

Variable Rate Mortgages, or ARM mortgages, are a combination of fixed-rate and adjustable-rate mortgages, offering borrowers the opportunity to benefit from lower initial rates, flexibility, and the potential to take advantage of falling interest rates. With an ARM mortgage, borrowers have the option to fix the rate for a certain period of time before the rate is adjusted in line with the market. The combination of fixed and variable rates helps to minimise the risk of interest rate fluctuations for borrowers; making ARM mortgages a more attractive option than variable rate mortgages, as they offer protection against rate hikes while potentially offering lower interest payments.For borrowers looking for a mortgage option that offers flexibility, protection against rate hikes, and the potential for lower repayments, an ARM mortgage is a great choice.

Variable-rate mortgage features

Variable rate mortgages (VRMs) are a great choice for borrowers who are comfortable taking a bit of a risk to benefit from changes in the interest rate. VRMs allow borrowers to adjust the amount of their monthly payments based on the Bank of England’s interest rate, meaning that they can save money on their mortgage payments if the interest rate drops. This added flexibility is one of the main advantages of a VRM, as borrowers can switch to a different rate if their circumstances change.

In addition to offering more flexibility than fixed-rate mortgages, VRMs also come with various other benefits. These include lower initial interest rates, which can help to save borrowers money over the long term. VRMs can also be tailored to suit individual borrowers, with different terms and conditions available depending on their circumstances. Some VRMs even come with additional features such as offsetting, which allows borrowers to reduce the amount of interest they pay on their mortgage.

Overall, VRMs are ideal for borrowers who are comfortable with taking a bit of a risk, as they can benefit from changes in the interest rate. However, it is important to remember that the rates are subject to change and could go up as well as down, so it is important to consider all the options before making a decision.

Variable rate mortgage offered by Halifax

Variable rate mortgages from Halifax offer customers the flexibility to choose a mortgage that suits their individual needs, with the added benefit of competitive rates. A variable rate mortgage means that your monthly payments can fluctuate with the Bank of England base rate, giving you the certainty of knowing that your payments are fixed.  Halifax offers a range of variable-rate mortgages, including fixed-rate mortgages, tracker mortgages and discount mortgages. Whatever your needs, Halifax has a mortgage solution that is tailored to you. With a variable rate mortgage from Halifax, you can benefit from competitive rates, flexible options and the peace of mind that comes with knowing your payments are secure.

At MorgageTek, we understand the importance of having a mortgage that works for you, so we offer a range of variable-rate products to meet your needs. Whether you’re a first-time buyer or an experienced homeowner, we can help you find the right mortgage. With MorgageTek and Halifax, you can rest assured that you’re getting the best deal on your mortgage.