The benefits of a UK standard variable rate mortgage

A UK standard variable rate mortgage is one in which the amount of interest you repay varies in line with the lenders base rate changes . This type of mortgage is the most common type of mortgage in the UK.

Benefits

A UK standard variable rate mortgage is a well understood, simple product, which is easy to set up and all mortgage lenders will be able to supply.

Your monthly payment will automatically go down when the lenders base rate goes down..

Risks

With a UK standard variable rate mortgage your mortgage payment will automatically go up when the lenders base rate rises. The lenders standard variable rate will not necessarily be the same as the underlying Bank of England (BoE) base rate, and the lender may choose not to pass on a portion of the BoE base rate change when it falls, or there may be a delay. However lenders are fairly quick to pass on base rate rises.

You cannot predict the monthly cost of the borrowing during periods where interest rate volatility is high. This may cause financial concern if you were unable to support increased payments.

During times of rapid interest changes there may be additional paperwork to complete, depending on payment method. This may become a little tiresome.

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