Gazette Articals
Standard Variable Rate
We have looked at the Fixed and the Tracker Mortgage, so let us take a look at the other major player in the market, the Standard Variable Rate or SVR.
The standard variable rate is exactly what is says, it is a mortgage plan that will be set at a given rate above the Bank of England base rate, and is the lenders most basic, no frills plan that will follow the base rate up and down in the same way that the tracker will, but without the discount.
The disadvantage of this mortgage plan is that when bank rates are going up, then so will this one. The advantages are when bank rates are coming down this plan will follow. Other advantages are it does not, as a rule, have any arrangement fees involved in setting up the plan in the first place, it does not tend to tie you in for a set term, and therefore tends not to have any early repayment charges when you want to leave it. Another advantage is that it is far easier to make lump sum, or overpayments, on the capital also without penalty, whereas the fixed and tracker will usually limit you to ten per cent per annum before they begin to incur additional charges.
The Standard Variable Rate might therefore suit the type of buyer who is willing to take a chance on interest rates falling in the future, unlikely in the present climate, or for someone who is intending to move on or make large overpayments during the term of the mortgage, it may also suit those who are buying a run down property and intend to sell it on as soon as it is finished and possibly go into rented accommodation until they find their next project.
Previous articles can be found at www.mortagestosuit.co.uk