Standard Variable Rate Mortgages
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Following the increase in interest rates on 5 July by 0.25% it
is widely expected that most lenders will increase their
standard variable mortgage rate by at least the same amount and
indeed some have already done so. But what is a standard
variable rate (svr) and how does it affect you?
The svr is typically the rate of interest that you would be
charged by a lender if you were not on a “special deal”. The
rate of interest varies and normally moves up and down in line
with movements in the Bank of England base rate. This means that
if you have a mortgage which is based on a svr your mortgage
payments will fluctuate from time to time. However, if you took
out a two- year fixed rate mortgage this is, by definition, not
the lender’s standard variable rate. The fixed rate will apply
for the two year period and after that the lender would normally
charge you their standard variable rate.
Most people would normally then be better off if they could get
another “special deal”. At the time of writing (10 July 2007)
standard variable rates are moving to in excess of 7.5% whereas
you can still get fixed rate mortgages at less than 7.0%.
Many people are on svr mortgages because they have simply never
thought to re-mortgage. They have not looked to see whether the
lender that gave them the good deal two, three or five years ago
is still giving them a good deal now that they are not on the
rate they originally got.
The simple way to check that you are still getting a good deal
is to use a mortgage comparison site. This will show you what
the best deal available happens to be =96 it is better to check
this than to just hope that it is the current mortgage that you
have.
About The Author: http://www.mform.co.uk allows you to compare
mortgages form all UK mortgage lenders.
Please use the HTML version of this article at:
http://www.isnare.com/html.php?aid#169444
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