Standard Variable Rate

What is a Standard Variable Rate (SVR)?

Standard Variable Rates (SVRs) are the normal lending rate charged by a bank or building society. It can change at the lenders discretion and generally changes more or less in line with the Bank of England Base Rate, although there are complaints that whilst lenders are quick to pass on any rate rises, lenders do not pass on full rate cuts to customers.

Some lenders link to LIBOR or Barclays base rate instead. Most mortgages are automatically transferred to a lender’s SVR after their fixed rate or discount period ends. As the SVR is often higher than fixed rate deals, most people try to fix a new mortgage deal before the end of their current deal.


Q: How is SVR calculated?

A: SVR is not calculated as much as it is agreed upon. Unlike a tracker mortgage which is the Bank of England base rate plus an additional percentage, the amount you pay for a standard variable rate mortgage can vary even if the base rate stays the same. It is however usually fairly close to base rate changes.

Q: How easy is it to get out of an SVR mortgage?

A: If you want to repay a chunk of your mortgage early, an SVR mortgage can make this easier as early repayment charges are often foregone on this type of payment. Even though your bank is obliged to tell you if you if the SVR changes on your mortgage, they may not tell you if their other products could work out as a better deal, so it’s important to check regularly and switch if necessary.

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