Variable Rate Mortgage
This article offers a guide to Variable Rate Mortgages, sometimes referred to Standard Variable Rate Mortgages.
Variable Rate Mortgages, are fairly straightforward. Put simply your mortgage repayment 'varies' with the Bank of England's base rate interest rate, any change of interest rate is usually speedily announced by various media, in particular you can't fail to hear about it on the TV, Radio or read about it in the newspapers or on the internet. The BBC's mortgages section is a good source for the latest news.
Typically the mortgage companies interest rate is higher than the base rate, this is usually around 1 or 2% depending on the deal being offered at the time. For Example: If the interest base rate is 5%, and the mortgage company offers a rate of 1% above base rate you will be paying 6% mortgage.
Its important to realise that although in recent times interest rates have only moved by small percentages, it can change at any time and by any amount. So one day you could be paying a Variable Rate of 6%, and the next day you wake up, base rate interest has gone up 2% and suddenly your paying 8% interest on your mortgage! Of course, the opposite could also be true, whilst rates are very unlikely to drop sharply, any drop in interest rates means you will pay less.