It is only in recent times that clients have become aware of the value of a standard variable rate mortgage as their current deals with their existing lender come to an end they are often finding that they are better off going onto a standard variable rate than paying a very large fee and taking a discounted, tracker or fixed rate mortgage with their lender.

In recent times it has always been to the client's advantage to look around the market to see what other deals are available if they moved providers. In the current troubled mortgages market it is very often paying to stay put with your existing lender and to stay or transfer to a standard variable rate which is providing some stability to the mortgage repayments and does not lock the client into that lender for a given period of time.

The standard variable rate is also proving some stability to the market and apart from a fixed rate is proving to be very popular with clients who want to feel that they will not feel the draft or storm when interest rates start to move upwards as the housing market creeps into recovery.

It is providing a safe haven for borrowers who want to see a fairly peaceful transition from discounted to a standard variable rate when in the past clients would have shunned this plan as boring and not attractive to the discerning clients who do want a simple explanation that the plan works and will not hold them up to ridicule as time goes on and the markets become more volatile.

We must see a return to positive growth in the property market to give lenders the chance to bring more attractive plans linked to the increased equity in property each month which they has the knock on effect of lowering the lenders exposure to risk. 

Standard variable rate mortgages now have a very real part to play in the recovery of the economy as lenders look for low risk high charge rate schemes to fill the coffers of the current government.

Here is the first mortgage term you should understand called Standard Variable Rate, or SVR. This is the typical interest rate that you will be paying on the total amount you are borrowing. It is usually expressed as a percentage, and differs from an APR (Annual Percentage Rate). An APR includes all costs associated with the Finance, such as interest, fees, and any compulsory insurances etc.

While interest rates often vary quite widely across the white board, all lenders will have a Standard Variable Rate. It's the default rate for their mortgages, and can provide a good indication of whether they are offering good deals. Comparing different lenders' Standard Variable Rates is just one way to get an idea of who has lower rates generally, though there will be exceptions to this rule.

This rate fluctuates, going up or down according to the economy and the lender. The biggest factor that effects Standard Variable Rates is the Base Rate set by the Bank of England. In recent years this has been kept relatively low, and mortgage interest rates have been particularly good for borrowers. However, this could change and you should bear in mind that rates could go up in the future.

Many mortgages start off with special introductory rates, and then revert to the Standard Variable Rate Mortgage after a certain period. These include capped and collared mortgages. There are also fixed rate and interest only mortgages available, which are covered in more detail on other pages. When considering mortgages with special introductory rates, you should also take into account what the Standard Variable Rate is likely to be once your initial period is over. Many mortgages come with the condition that you stick with the same one for several years, even when the special offer period is over. There will often be penalties if you want to change mortgage within this tied period.

Be aware that there is a difference between interest calculation and interest charging. Some mortgages calculate interest on a daily basis, which works out as fairer for the borrower as your overall balance is reducing every month, and therefore the interest will be reducing too. Other lenders calculate interest monthly or annually, although annual calculation should be avoided if at all possible, as you will be paying the same interest for a whole year despite your balance having been reduced by your repayments. You should also ensure that your interest is charge in arrears, rather than in advance.

If you refinanced your old mortgage or purchased your home with an Variable Rate Mortgage, you might wonder what will happen once the introductory period of your Finance ends. Many homeowners that financed their homes with these risky variable interest rate mortgages are in for a shock when the mortgage lender adjusts the interest rate and monthly payment. If you are one of these homeowners, here is what you need to know to protect yourself from a mortgage payment crisis.

Mortgages