A standard variable rate mortgage loan (which is SVR for short) is the standard lending rate offered by lenders. It will most frequently reflect the Bank of England Base Rate, shifting up and down a long with it. Mortgage providers. have a tendency to ask for one or two percent beyond the Base Rate as their SVR. Consequently, when the Base rate goes up, so will your mortgage, hence the term ‘variable’ since your monthly payments can vary.
A fixed mortgage is when the rate of interest on a mortgage is set for an established time period. It grants the borrower a degree of comfort knowing that their mortgage repayments won’t vary for the duration of that time frame freeing them to plan properly. As soon as a fixed rate mortgage term had run it’s course the mortgage will once again become a standard variable rate.
A tie in period on a mortgage loan is when you are legally tied to the mortgage company for a specific time period. How it works is that the mortgage company will give you a good deal, like a fixed rate mortgage loan for two years. However, you might be linked to the mortgage company for a specific period afterwards, such as a year, during which you will have to accept their standard variable rate. This is a means for lenders to regain the money they forfeited in furnishing you with a good deal for two years. Should you want to change mortgage providers while in the ‘tie in’ term, it will be necessary for you to pay a financial penalty which might mean thousands of pounds.
Many existing borrowers tend to put off remortgaging because they think the trouble generated by the procedure is just not worth while. Your existing lender should be approached and asked just what alternative offers are available. If you have doubts about the procedures and benefits about remortgaging, then it may be prudent to call on the expertise of an independent mortgage advisor - preferably one who is not tied to any one particular mortgage lender. The internet can also be a good place to start but make sure you read and understand all the small print and take professional advice before committing yourself to any deal.
If the mortgage you have at present has, for instance, a three year introductory discount and you are still within that three year period, you may have to pay an early redemption charge and it would be wise to check to see if after paying redemption charges, the new deal you are seeking is still worthwhile.
Amongst borrowers in the U.K. there is still a great deal of apathy from those who think it is just too much hassle to change their lender or type of mortgage. If the balance of your present mortgage is sufficiently low and you are receiving a loyalty rate from your lender,it could be that the monthly savings you generate means that it would be better not to change but keep to the deal you have at present.
It is a fact that rates, although low at the moment, are sure to rise in the future and the decision whether to remortgage or not comes down to one?s individual financial situation. Whatever you decide to do, shop around and do not make any commitment until you have exhausted all the various possibilities.