In a Standard Variable Rate (SVR) mortgage, the borrower’s monthly repayments are based on the prevailing rates of interest their lender charges – not the Bank of England (BoE) base rate. In other words, it is entirely the lender’s decision on the rate of interest it charges the borrower.

Although the rate of interest charged in a SVR mortgage can be influenced by changes in the BoE base rate, whenever the bank raises or lowers base rate, the lender may do the same, or ignore the change altogether. On occasions, the lender may increase or decrease its rates of interest, even if the BoE has not changed the base rate.

The rate of interest charged on SVR mortgages can range from 2% to 5% above base rate, or more.

As SVR mortgages do not involve any special financial inducements, they can be more (or less)  expensive than other types of mortgages. And unlike fixed-rate mortgages, where the rate of interest never changes, SVR borrowers can never be certain what their monthly repayment is going to be.

Generally speaking, arrangement fees for SVR mortgages tend to be lower than for trackers or fixed-rate deals and if the borrower pays off their mortgage sooner than planned, they may not incur an early repayment charge.