What is a standard variable rate?

July 12, 2022
Information published was correct at the time of writing

In this episode, we discuss what a ‘ standard variable rate’ is, as well as introduce our new Mortgage Pledge for all UK Homeowners – we will ensure you don’t pay more than you need to for your mortgage.

Hello and Welcome to this podcast brought to you by Charles Cameron and Associates.

Today we will be looking at what a ‘standard variable rate’ is, as well as introducing our new Mortgage Pledge for all UK Homeowners – we will ensure you don’t pay more than you need to for your mortgage.

In the current climate, making sure you are on the best rate available for your mortgage, is a great way to free up much needed income to help cover rising energy and inflation costs. If you currently have a mortgage, at the end of your tie in period your lender will automatically move your mortgage onto their Standard Variable Rate or ‘SVR’. An SVR is similar to the ‘standard tariff’ charges for utility bills and will most likely be much higher than what you are currently paying, if you are on a fixed or tracker mortgage product.

A recent report by UK Finance, who are a financial services trade body, indicated that a staggering 12% of mortgage owners – over 1million people, are currently sitting on their lenders Standard Variable Rate (SVR). Though some other reports suggest this could even be as high as 25% of mortgage holders.

With the average SVR currently sitting around 4.78% APR, this could mean drastically higher mortgage repayments for thousands, if not millions, of UK households in the coming months. Which is very unwelcome news at any time but especially so during a cost-of-living crisis.

Similar reports have also found that many of the mortgagees currently on their lenders SVR, believe that by moving to a higher monthly repayment they will actually pay back their mortgage faster, as they do not realise that the high jump in monthly repayments is comprised of additional interest, and is not in fact repaying more of the capital debt outstanding. A similar amount of homeowners have also expressed concerns about making a new mortgage application as they are worried that they will not be approved by their current lender now.

When comparing an average SVR rate of 4.78% to fixed rate mortgages currently being offered by High Street lenders, the SVR is costing many households over 2% APR more.

For example, on a £200,000 property, with an outstanding mortgage of £150,000, on a 25-year term repayment mortgage, the average SVR of 4.78% would cost £858 pm.

The same mortgage on a 2-year fixed rate deal at 2.40% APR would be £665 – a huge saving of £193per month or £2,316 per year in interest.

At Charles Cameron & Associates, we pride ourselves on always offering the very best mortgage advice for your individual circumstances. If you arrange a mortgage using our services, we will always ensure that we review your mortgage and arrange a new application so that you never move onto your lenders standard variable rate, which can often be much higher than an initial mortgage interest rate on a fixed or tracker deal.

However, we want to help as many people as possible to get through this current cost of living crisis, so we are delighted to now extend this promise to every mortgage holder in the UK, even if your original mortgage was not arranged by one of our professional advisers.

By telling us some basic details about your existing mortgage, we promise to monitor the market and pledge that you will never pay more than you need to at the end of your tie-in period. We will track your mortgage and be in touch with you at the opportune time, so you don’t need to worry about when to remortgage. Simply visit www.ccameron.co.uk and register today.

Our friendly and helpful advisers are here to assist you in any upcoming refinance to give you peace of mind.

You can now find our Mortgage Matters podcast on a range of podcast platforms, including

Spotify – https://buff.ly/3ylmtO2

Apple Podcast – https://buff.ly/3up3dxY

Amazon Music – https://buff.ly/3yhGW6H

And Google Podcast – https://buff.ly/3bTAlrz

Don’t forget, our professional friendly advisers are on hand to support you and can help you explore all of your options.