What is a Standard Variable Rate Mortgage?
Standard variable rate mortgages are at the higher end of the interest scale. When you initially take out a mortgage, you are likely to be offered a low rate as an incentive to take out a new loan with that bank or building society. These incentive rates are over 2 or 5 years. So, what happens at the end of the low rate? If you are not careful it will revert to the lender’s standard variable rate or SVR which can be very costly to you.
Why you shouldn’t be paying the Standard Variable Rate on your mortgage
It rarely makes financial sense to have an SVR standard variable rate mortgage.
The SVR Standard Variable Rate will often be far more expensive than most mortgage interest rates offered by your bank or building society. You can quickly change from an SVR to a better mortgage deal will save you a considerable amount of money.
With over 14,000 rates, deals, and products available on the market there is a good chance, you will be able to get a far lower mortgage interest rate than your existing lender’s standard variable rate SVR.
What are the chances of my existing lender having the very best rate?
With over 200 different banks and building societies offering mortgages in the UK, the chances that the bank or building society you are with is offering the best interest rate are very slim!
How do I get off the standard variable rate (SVR)?
Check to see if you are a base rate or the lender’s SVR. The next step is to see what interest rate your existing bank or building society will offer you to stay with them. Make sure that you are aware of any charges or costs that are involved if you do decide to stay.
Now you know what you can get with your existing lender you need to see what products other banks and building societies will offer you to move over to them. Most lenders offer good incentives in the form of low-interest rates and low costs and charges to gain you as a new customer.
How do I start to compare over 14,000 different mortgages?
Get yourself a whole of market mortgage broker who will have access to all the available mortgages offered by every bank and building society. The broker will search the whole market to compare the best mortgage deals and incentives being offered. They will be able to find the number one fixed-rate mortgage deal for you.
Are there any good aspects of being on a standard variable rate (SVR) mortgage?
Yes, there is! Even though an SVR can be costly, it means you are in a position to either negotiate a new better mortgage deal with your existing mortgage lender. Alternatively, you can choose to shop around and move to a new lender that is offering a lower rate. You don’t want to stay on an SVR for long at all, however, it means your current rate has run out and you can leave without a fine from your existing lender for moving away from them. Speak to our mortgage advisers who can make sure you switch mortgage at the best time between your mortgage ending, just before you switch onto the higher SVR.
How much money can I expect to save on a monthly basis?
This is a difficult question to answer as it depends on the size of your loan. The bigger the mortgage, the more you can save by remortgaging. It is not unusual to save £200 – £300 a month.
How long does it take to remortgage?
The average time to remortgage is two months. It, therefore, makes sense to get the remortgage underway before you are on the lender’s SVR standard variable rate whilst also making sure you don’t pay any early repayment charge for leaving early.
If you have a SVR standard variable rate mortgage the mortgage advisers and conveyancers will work hard to reduce the amount of time to remortgage to a minimum. The prime time to start the remortgage is 4-6 months before your existing mortgage rate ends.
Should I fix my mortgage rate or choose a tracker rate?
The answer to this will depend on several factors with the main one being your attitude to risk. If the thought of the interest rate rising worries you then it may be wise to get a fixed rate. Your advisor will be able to give you advice and savings on the mortgage types and comparisons on fixed-rate mortgage deals and tracker rate mortgages which may help you make a decision.
My income has changed and now I am on the variable rate
This doesn’t necessarily mean that you need to be on the standard variable rate SVR. This could be costing you a lot on a monthly basis. Find a broker who will have access to every bank and building society mortgage affordability calculator.
Each lender has a different calculation on how much they will lend and it will definitely be worth investigating if another lender will lend you what you require based on your new income.
Variable-rate mortgages and financial difficulties
People often end up on variable-rate mortgages when they have had financial difficulties in the past. If you are on SVR or the bank of England base rate, don’t assume that you have no options open to you.
It will really depend on what financial difficulties you have. If it is down to a couple of late repayments on your bills and credit cards, then you will find that a lot more of the banks and building societies will consider you now compared to a couple of years ago.
Speak to a broker who will be experienced at this. The broker will understand all the different lenders’ (there are over a hundred!) attitudes to debt and late repayments on credit cards, therefore there is a good chance that you will fit one of these lender’s criteria.
Being on the SVR standard variable rate or base rate is very expensive and unnecessary therefore you owe it to yourself to at least investigate if you have other options open to you.
Even if you do not fit any lender’s criteria your existing bank or building society may offer you a new rate rather than staying on the SVR. Ideally, compare the fixed-rate and tracker mortgages being offered and compare the monthly repayments
As long as you are not changing the term or the loan amount, they will not underwrite your mortgage and therefore there is a good chance that they will offer you a new fixed or discounted rate and reduce your monthly repayments, and finally get rid of those SVR rates!
I only have a few years left on my mortgage does being on an SVR matter?
Even if this is the case, there is no reason why you should be on the SVR. The fact that you only have a few years left until your mortgage is repaid probably means that your best option is to stay with your existing lender however still speak to your adviser.
You may be offered 2 or 5-year fixed-rate or tracker rate mortgages. Make sure there is a small or no arrangement fee to get the loan as this will be counterproductive on any savings made.
Your mortgage adviser will be able to see what other banks will offer you compared to your existing bank or building society.
REMORTGAGE TO A BETTER RATE
Standard Variable Rate (SVR) Summary
The only person who will benefit from you being on an SVR standard variable rate and is your existing lender. So find yourself a FEE-FREE whole-of-market mortgage adviser. They can quickly tell you if you will benefit from getting off the SVR Standard Variable Rate.
At YesCanDo Money we are a NO FEE mortgage broker and adviser. We are an independent family-run broker based in Hampshire. We have been established for over 30 years and always put our clients first. We make communication really easy for our customers by using WhatApp always being able to answer any questions along the way.
We don’t expect you to take our word for it, so take a look at our Trust Pilot and Google reviews. We have an amazing team of very experienced mortgage advisors who are at hand to help and assist you. Give us a call and let’s start saving you money.
With the Bank of England reducing the base rate to a historic low, there has never been a better time to remortgage!
How to find a good Mortgage broker with no fees
Will a mortgage adviser charge me for their services?
It’s true that a lot of mortgage advisers charge you for their services however there is such a thing as a NO FEE mortgage adviser.
How do I find a NO-FEE mortgage adviser?
Ask your family or friends if they have recently remortgaged and if they used a mortgage adviser. Another alternative is to carry out a Google search. Search for a no-fee mortgage broker.
Once you have a list of local companies, try to find one that you feel you would like to work with. Have a look at their website. Have a look at their Facebook and Instagram pages.
Do they have lots of 5-star Trust Pilot and Google reviews? Do they have lots of very happy customers?
What else can I expect a mortgage adviser to do?
Explain that you have an SVR standard variable rate mortgage. The mortgage advisor will search the whole market to find you the best rates and mortgage deal but this is only the start of what they will do for you.
They will get the new application submitted to the lender and liaise with them every week as well as talking your conveyancer and existing lender.
A mortgage advisor will arrange for the valuation survey to be done and see the application through to getting the new offer. Once the offer is received, they will see everything through to completion.
What other fees might I need to pay when getting a new mortgage?
These are some of the fees that you may need to pay when you remortgage –
- Lenders arrangement fee
- Valuation survey
- Legal fees
- Arrangement fees
- Early repayment charge
Although these fees are very common, many lenders will offer these for FREE as an incentive to gain you as a new customer. Your mortgage adviser will be able to search to see who is offering free incentives to keep the cost of remortgaging as low as possible.
Should a mortgage broker be regulated?
Yes, your broker should be authorised and regulated by the financial conduct authority (FCA).