Standard Variable Rate: Why Remortgaging Late Costs You
If your fixed rate deal is ending soon and you have not sorted a new one, there is a date worth circling. The day your deal expires, you do not just lose your old rate. Your lender moves you onto its standard variable rate automatically, whether you meant for that to happen or not.
That single move is one of the most expensive mistakes we see. It is also one of the easiest to avoid.
What a Standard Variable Rate Actually Is
Most people assume their mortgage continues as normal once a fixed term finishes. It does not. Unless you arrange a new deal, your lender switches you onto its standard variable rate, often shortened to SVR.
Your lender sets the SVR, not the Bank of England. It almost always sits considerably higher than any fixed or tracker deal you could arrange instead. The average SVR currently sits just below 6.49%. Average fixed rates on the market sit several percentage points lower than that. MoneyHelper’s guide to standard variable rates breaks down how lenders calculate theirs.
Why People End Up on a Standard Variable Rate by Accident
Nobody plans to end up on their SVR. It usually happens for ordinary reasons. Remortgaging feels like something to deal with closer to the renewal date. Life gets busy. The letter from your lender gets lost in a pile of post nobody opens straight away.
The problem starts once that deadline passes. Most people do not notice for weeks or months. By then, they have already paid the higher rate for far longer than they needed to, often for no benefit at all.
How Much Does a Standard Variable Rate Actually Cost You?
Take a typical £250,000 mortgage over 25 years. The gap between a competitive fixed rate and the average standard variable rate can add several hundred pounds to your monthly repayment. Even a few months at that higher rate adds up to real money, spent for nothing. If you are not sure how lenders worked out your original borrowing, our guide to mortgage affordability explains what goes into that figure.
The Six Month Rule for Remortgaging
Most lenders let you apply for a new deal up to six months before your current one ends. Many people do not realise this. You do not need to wait until your deal actually expires to start the process.
Applying early also protects you if rates move while you decide. Many lenders let you switch to a cheaper rate if one appears before your new deal completes. Reserving a rate now does not lock you out of a better deal later.
When You Should Start Looking
Start the conversation around four to six months before your current deal ends. That gives you time to compare the market properly, sort any paperwork, and avoid the last-minute scramble that catches so many people out.
Not sure when your deal ends? Check your most recent mortgage statement or annual letter from your lender. The date is usually printed clearly, even if it is easy to miss.
Already on Your Standard Variable Rate?
If you have already slipped onto your SVR, here is some good news. You can usually move off it at almost any point, without waiting for a renewal date. You will likely face no early repayment charge either, since you are not part way through a fixed term anymore.
Act now, and you stop overpaying from that point forward.
What We Recommend
Set a reminder six months before your current deal ends, not six weeks. Speak to a broker who compares the whole market, not just one lender’s options. Reserve a new rate early if you can. None of this commits you to anything immediately. It simply protects you from a rate you never chose in the first place. If you are remortgaging rather than buying for the first time, it is still worth having a mortgage agreement in principle in place before you reserve a new rate, so you know exactly where you stand.
At City Mortgage Solutions, we track renewal dates for our clients and reach out well before deals expire, so nobody pays more than they need to by accident. Get in touch with our team if your deal is coming up for renewal.
Risk Warning: Your home may be repossessed if you do not keep up repayments on your mortgage.
Frequently Asked Questions
What is a standard variable rate? It is the rate your mortgage automatically moves to once your fixed or tracker deal ends. Your lender sets it, rather than tying it directly to the Bank of England base rate. It usually runs higher than deals available on the open market.
How early can I remortgage before my deal ends? Most lenders let you apply for a new deal up to six months in advance. Many will also let you switch to a better rate if one appears before your new deal starts.
Will I pay a fee if I remortgage before my deal ends? Not usually, as long as your new deal starts only once your current one finishes. Remortgaging during your fixed term may trigger an early repayment charge, so timing matters.
I am already on my standard variable rate. Can I still remortgage? Yes. You can usually move off your SVR at any time. There is typically no early repayment charge involved, since you are not part way through a fixed term.
How much more expensive is a standard variable rate? It varies, but a standard variable rate typically runs several percentage points higher than the average fixed rate on the market. That can mean a noticeable jump in your monthly payments.