This is the standard rate of interest that lenders use and like it says, it is variable. This is because it is linked to the Bank of England base rate - so whenever that goes up, so will your mortgage rate and thus so will your mortgage payments. However, SVR Mortagages aren't just linked to the Base Rate, they're usually set at around 1-2% higher. This makes this type of mortgage very expensive.

Advantages of Variable Rate Mortgages

• If interest rates drop because your payments will follow suit and you could end up saving money on your mortgage.
• Usually, there are no Early Repayment Charges by having a Variable Rate mortgage.

Disadvantages of Variable Rate Mortgages

• On a variable rate mortgage you'll pay the lender's standard variable rate of interest (SVR) - this can be expensive.
• The variable rate is linked to market conditions - this means that if the Bank of England puts the interest rate up - it's likely your SVR will also go up.

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