Overview
The end of a fixed-rate deal is not the end of the mortgage. Unless another arrangement is in place, the remaining loan normally moves to the follow-on rate specified in the offer.
That rate may be called the standard variable rate, or SVR, although lenders also use other names. The important details are the actual rate, the date it starts and what it does to your payment.
Quick Answer
An SVR is a variable rate set by the lender. It is not necessarily tied directly to Bank Rate and can differ from the rate available on a new mortgage deal.
Check your offer and lender's notice rather than assuming the payment stays the same. Compare a product switch with the existing lender, a remortgage elsewhere and any reason for staying temporarily on the follow-on rate.
The Three Dates to Put in Your Diary
Write down the fixed-rate end date, the date any early repayment charge stops applying and the first payment date at the new rate.
They may be related, but do not assume every date is identical. Ask the lender to confirm the proposed effective date of a switch and whether the payment collection date changes.
Our remortgage timing guide covers when to start comparing options. The goal is enough time to investigate without accidentally triggering a charge by completing early.
Why the SVR Does Not Simply Track Bank Rate
A tracker uses a contractual link to a reference rate, subject to its terms. An SVR is the lender's own variable rate.
A Bank Rate cut therefore does not guarantee that an SVR falls by the same amount on the same date. Equally, a lender's new fixed deals can change independently of its SVR.
Read fixed, tracker and discount mortgages if the product names are becoming confusing. A discounted variable deal is also different from a fixed rate: its discount can be fixed while the underlying rate moves.
Estimate the New Payment Properly
Use the outstanding balance and remaining mortgage term, not the original loan amount and original term.
For an interest-only illustration, a £150,000 balance at 5% costs £625 a month in interest; at 7% it costs £875. That is a £250 monthly difference, and neither payment reduces the £150,000 capital.
A repayment mortgage needs a repayment calculation because each instalment includes capital as well as interest. Ask the lender for the exact new payment and check it against an illustration using the same balance, term and repayment type.
Rates in this example are hypothetical, not current offers.
Product Transfer or Remortgage?
A product transfer changes the deal with the existing lender. A remortgage moves the borrowing to another lender and normally involves a new application and legal steps.
The available checks and process depend on what you are changing. Do not assume that increasing the balance, changing borrowers or extending the term is the same as a straightforward rate switch.
Compare the rate, product fees, legal and valuation costs where applicable, incentives, flexibility and balance remaining at the end of the comparison period. Our mortgage deal comparison guide explains why the lowest headline rate is not always cheapest.
Could Staying on the SVR Make Sense?
Sometimes flexibility matters. You may be planning a sale, a large repayment or another change for which a new early repayment charge would be inconvenient.
That does not mean the SVR is automatically the right choice. Compare the extra interest for the expected period with the fees and restrictions of alternatives, including any available tracker or short-term option.
For example, an additional £180 a month for three months is £540. Compare that known illustration with the actual costs of switching, while allowing for the risk that the move takes longer than expected.
Do not assume an SVR has no charges or restrictions without reading the specific terms.
If the Higher Payment Is Unaffordable
Contact the lender before the first difficult payment. Explain the expected shortfall and ask what support or changes may be available and how they would affect cost and credit reporting.
Do not cancel the Direct Debit and hope the issue will resolve itself. Nor should you assume a new lender will approve a remortgage before checking eligibility.
Our mortgage arrears guide explains the early steps.
Frequently Asked Questions
Browse our mortgage guides. Your home may be repossessed if you do not keep up repayments on your mortgage. This is general information, not personal advice.
