What is a Standard Variable Rate?

A Standard Variable Rate is a type of variable rate mortgage, which means that the total amount that you repay each month can change.

On a repayment mortgage, a slice of your monthly payment goes towards the interest that is charged by your lender. The other part goes towards repaying the money that you have borrowed.

If your lender raises its Standard Variable Rate and this is the type of mortgage you are on, your monthly repayments will increase as well. But, the additional amount that you pay will go towards the higher interest rather than the capital, so although your payments have gone up, you will not be paying off your mortgage quicker. If you’re on your lender’s Standard Variable Rate, you need to be happy with the risk of your mortgage payments going up if the rate changes and aware that theres a high chance you could get a better deal elsewhere.