Variable rate mortgages allow you to benefit from any falls in interest rates but you risk rates rising. Find out more about them here.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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Variable rate mortgages guide

What is a variable rate mortgage?

A variable rate mortgage either tracks a reference rate such as the Barclays Bank Base Rate. Depending on which type of variable rate mortgage you have, your repayments will rise and fall as the Base Rate or lender’s rate rises and falls.

Different types of variable rate mortgage:

Standard variable rate (SVR)

This rises and falls in line with general interest rates so you should benefit from any drop. However, if general interest rates rise, your mortgage rate will increase too, along with your monthly repayment. There aren't usually any early repayment charges.

Tracker mortgages

This rate is a set amount above or below the Barclays Bank Base Rate (BBBR). The aim is to 'track' the base rates (whether they rise or fall). The BBBR is a variable rate set by Barclays Bank Plc, which typically follows the Bank of England Base Rate but is not guaranteed to do so. BBBR is currently 0.50%. Unlike the SVR, a tracker mortgage must follow the base rate as it goes up or down. There are no early repayment charges on this type of mortgage.

Variable versus fixed rate mortgages

If interest rates go down, you will pay less every month on a variable rate mortgage. However, you need to be prepared to make higher payments in case rates go up.

Choosing a mortgage

When selecting a mortgage consider:

  • Your comfort level: Do you want the potential benefits of a variable rate mortgage or would you rather know in advance exactly what your payments will be?
  • Your financial capacity: Can you cope with a rise in interest rates?

Our specialist mortgage team will help you pick the most appropriate mortgage for you. This free service does not need any commitment from you.

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