What are variable mortgage rates?

Variable mortgage interest rates, also known as tracker or discounted mortgage products, are mortgage loans with interest rates that can fluctuate over time. The interest rate on a variable mortgage is tied to an economic index, such as the Bank of England base rate or the own building society standard variable rate. As the index changes, so does the interest rate on the mortgage.  This means that borrowers with a variable mortgage may see their monthly mortgage payments change from one period to the next.

One advantage of variable mortgage interest rates is that they may offer lower initial rates than fixed interest rates. This can make them a good choice for borrowers who plan to sell their home or refinance within a few years, as they may be able to take advantage of lower rates while they have the loan.  Variable rates sometimes also have no early repayment charges.

However, variable mortgage interest rates also carry some risk for borrowers. If the index to which the interest rate is tied increases, the borrower’s monthly mortgage payments may also increase. This can make it more difficult for the borrower to budget and plan for the future. It’s important for borrowers to carefully consider their financial situation and risk tolerance before deciding whether a variable mortgage is the right choice for them.

Please note that your home may be repossessed if you do not keep up repayments on your mortgage.

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