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What is an SVR mortgage and why might you end up with one?

Sarah has never overstretched herself when it comes to money. After paying her

monthly bills, she’s always had a bit left over. So, when her mortgage lender wrote to

her to remind her that her five-year fixed-rate deal was coming to an end and that she

needed to find a new deal or she’d be switched to their standard variable rate (SVR), she

simply let them make the switch. She wasn’t worried about money and thought looking

for a new deal would be too much hassle.

The interest rate on an SVR mortgage is set by the bank or building society and they can

put it up at any time. It is usually higher than the rate you’d get with a mortgage deal

and can significantly increase your monthly payments.

As the cost-of-living crisis starts to bite, times are tight for Sarah. Her energy bills have

skyrocketed. Filling up the car costs a fortune. In fact, she seems to be paying more for

everything these days, even her TV subscriptions are getting more expensive. She’s

struggling to cover her monthly bills but, with interest rates rising, Sarah’s worried

she’s missed the boat when it comes to securing a competitive mortgage deal.

Has Sarah left it too late to switch from her SVR mortgage?

Although the interest rates on both tracker and fixed-rate deals are creeping up, it still

makes sense for Sarah to switch away from her SVR mortgage. According to Moneyfacts,

in March 2022 the average SVR was 4.61%, while the average rate on a two-year tracker

was 2.03% and on a two-year fixed was 2.65%. This means Sarah should be able to

make significant savings by switching. And she’s not the only one who could save

money. Research by Habito found 27% of mortgage holders in the UK are currently on

their lender’s SVR and they worked out, on an average mortgage, this translates to an

extra £340 a month.

How can Sarah make sure she secures the best deal possible?

Sarah would almost certainly benefit from speaking to a qualified mortgage adviser.

They understand the market and know where to find the best deals. Sarah may have to

pay a penalty to switch from her SVR mortgage. Sometimes, you have to spend a year or

more on an SVR before switching without a penalty. A professional will be able to advise

Sarah whether it makes sense to wait or to pay any penalty and remortgage straight


But Sarah is nervous about speaking to an adviser; she finds mortgages confusing.

Mortgages can be complicated but a qualified adviser will be able to explain them

simply and answer any questions Sarah has. Mortgage advisers are there to take the

effort out of finding the right deal and it’s got to be a lot less stressful than worrying

about whether you’re going to be able to pay your bills each month.

If you’re on an SVR mortgage or your current deal is coming to an end and you want to

avoid being switched to an SVR mortgage, we’ll be happy to help.

Watch the video below for more information.



Key takeaways:

  • Switching from an SVR mortgage could save you serious money.

  • Speak to a qualified mortgage adviser to make sure you switch to the best deal at the right time.

  • If your current deal is coming to an end, speak to a mortgage adviser before you’re switched onto your lender’s SVR.


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