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Mortgage Advisor & Director
What is a variable rate mortgage?
In comparison to fixed rate mortgages, variable rate mortgages mean that the interest level changes each month.
This means that your mortgage repayments will change accordingly. There are generally two types of variable rate mortgage.
Tracker
The interest rate is set at a consistent level above the Bank of England (BoE) base rate - which was reduced to 0.1% in March 2020.
Your mortgage repayments will move up and down accordingly with any changes to this rate. This is important to be aware of as you need to be prepared for any rate hikes that may increase your monthly repayments to uncomfortable levels.
Standard Variable
Standard variable rate mortgages are comparable to tracker mortgages in that they are subject to change over time.
However, they do not use the BoE base rate as a reference. Instead, they refer to the lender's standard variable rate, which is controlled by the lender. For some borrowers, they would rather align to the Bank of England base rate than the lender's Standard Variable rate to give transparency to rate changes.
Should I go for a variable rate or fixed rate mortgage?
With interest rates so low, there are great variable rate mortgage deals on the market.
If you don't mind the uncertainty of variable monthly payments, variable rate mortgages might be a good fit for you. If you are looking for more certainty in payments for budgeting, then a fixed rate mortgage might be the way to go.
Where can I find more information?
As a whole-of-market mortgage advice service, our experienced team of advisors have access to deals not available to the general public, and have helped thousands of customers to find their perfect mortgage. Complete our simple online form today to get started!
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
