What is a standard variable rate mortgage?
A standard variable rate (SVR) is an interest rate set by your mortgage lender. You might move to this rate after an initial mortgage deal ends.
Learn what to expect if your mortgage rate is switching to SVR.
Key takeaways
- You’ll be moved to SVR when your initial deal comes to an end.Â
- You can switch to a new deal or remortgage with a different lender if you don’t want to move onto SVR.
- Each lender sets their own SVRs and can change them at any time.
Each lender sets their own SVR usually based on their costs and other market conditions.
It’s a variable rate, which means it can go up or down. You can’t apply for an SVR mortgage. It’s just a rate you’ll move onto when your existing deal ends.
At Lloyds, we call it a lender variable rate. But we’ll refer to ‘standard variable rate’ in this guide to explain how it works in general.
Your lender will usually give you notice that your mortgage will be moving to the SVR, telling you what your new rate will be.
You’ll move to the SVR unless you choose to switch to a new deal.
The SVR may change in the future, along with your monthly repayments.
At Lloyds, we will only increase our lender variable rates if there’s a change to our cost of lending or due to specific reasons set out in our terms and conditions.
You could lose your home if you don’t keep up your mortgage repayments
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Whether it’s best to stay on an SVR or switch will depend on your circumstances and the mortgage deals you can choose from. SVRs are usually higher than the interest rate on fixed deals. But early repayment charges don’t normally apply on SVRs, which can be handy if you want to overpay. Compare the SVR against fixed and tracker rates, to see which one could be best for you.
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Yes, your lender could reduce the rate. Whenever there is a change to your rate or payment, your lender will notify you before the change happens.
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SVRs have no end date so can run until the end of your mortgage term. There are usually no early repayment charges, so you can choose a new deal when the time’s right for you.
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Yes, the Bank of England base rate can affect a standard variable rate. SVRs often rise or fall shortly after the base rate changes.
Learn more about the base rate and your mortgage.
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A tracker mortgage is a type of a variable rate mortgage. Tracker mortgages move up or down depending on the Bank of England’s base rate.
SVR is another form of variable rate mortgage, except it changes in line with the lender’s policy, not just base rate changes.
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Each mortgage type has its own benefits, and the best one will depend on your personal circumstances.
- Fixed rate – could give you extra stability for a set period.
- Tracker rate – could drop if the base rate goes down during your term. But less predictable and comes with the risk of going up if the base rate does.
- SVR – offers flexibility to overpay or pay back your mortgage early without being charged. But they might have the highest rates and monthly payments.
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