A variable rate mortgage means that the interest rate on your mortgage can change over time. This can either be an increase or decrease in your interest rate depending on the market conditions.
The main advantage of a variable rate mortgage is that your monthly payments can go down if the interest rate decreases. This can save you a significant amount of money over the life of your mortgage.
The main downside of a variable rate mortgage is that your monthly payments can go up if the interest rate increases. This can make it difficult to budget for your mortgage payments and may mean that you end up paying more interest over the life of your mortgage.
If you are considering a variable rate mortgage it is important to talk to a mortgage specialist to see if this type of mortgage is right for you. They will be able to help you understand the risks and benefits of a variable rate mortgage and help you decide if this is the right type of mortgage for your needs.
What is a variable rate mortgage?
Answer: A variable rate mortgage is a type of mortgage where the interest rate can fluctuate over time in line with changes in the market.
This means that your monthly repayments could go up or down.
How does a variable rate mortgage work?
Answer: The interest rate on a variable rate mortgage is based on an underlying interest rate such as the Bank of England base rate.
This means that when the underlying rate changes your mortgage rate will also change.
What are the risks of a variable rate mortgage?
Answer: One of the main risks of a variable rate mortgage is that your monthly repayments could go up if the underlying interest rate increases.
This could make it difficult to keep up with your repayments and you might end up having to sell your home.
What are the benefits of a variable rate mortgage?
Answer: One of the main benefits of a variable rate mortgage is that you could benefit from lower monthly repayments if the underlying interest rate decreases.
This could save you a significant amount of money over the term of your mortgage.
Should I get a variable rate mortgage?
Answer: There is no simple answer to this question as it depends on your personal circumstances.
You should speak to a financial advisor to see if a variable rate mortgage is right for you.
What is the Bank of England base rate?
Answer: The Bank of England base rate is the interest rate that the Bank of England charges to lend money to other banks.
This rate can influence the interest rates that banks charge customers including the rate on a variable rate mortgage.
What is the current Bank of England base rate?
Answer: The current Bank of England base rate is 0.
1%.
How often does the Bank of England base rate change?
Answer: The Bank of England base rate can change at any time but it is usually only changed a few times each year.
What other factors can affect my mortgage rate?
Answer: In addition to the Bank of England base rate your mortgage rate can also be affected by your credit score the type of mortgage you have and the length of your mortgage term.
Can I lock in my mortgage rate?
Answer: Yes you can lock in your mortgage rate for a set period of time typically between 2 and 5 years.
This means that your interest rate will not change during that period even if the Bank of England base rate does.
What is a tracker mortgage?
Answer: A tracker mortgage is a type of variable rate mortgage where the interest rate tracks the Bank of England base rate.
This means that if the base rate goes up your mortgage rate will also go up.
What is a discount mortgage?
Answer: A discount mortgage is a type of variable rate mortgage where the interest rate is discounted against the Bank of England base rate.
This means that if the base rate goes up your mortgage rate will not increase by as much.
What is an offset mortgage?
Answer: An offset mortgage is a type of variable rate mortgage where your savings are offset against your mortgage balance.
This means that if you have savings you could end up paying less interest on your mortgage.
What is a standard variable rate mortgage?
Answer: A standard variable rate mortgage is a type of variable rate mortgage where the interest rate is not linked to the Bank of England base rate.
This means that your mortgage rate could go up or down at any time.
What is an introductory rate mortgage?
Answer: An introductory rate mortgage is a type of variable rate mortgage where the interest rate is lower for a set period of time typically 1 to 5 years.
This means that your monthly repayments could go up after the introductory period ends.
