Mortgage lenders have their own standard variable rate (SVR) for which they control any increases or decreases. This rate tends to follow the Bank of England's base rate but can be significantly above that rate.

Mortgage lenders sometimes use different names for this type of rate, for example, ‘Mortgage Variable Rate’ and they operate in a similar way to a standard variable rate.

Some important notes to consider about standard variable rate mortgages include:

• If the standard variable rate of interest drops, your repayments will too.
• Equally, if the standard variable rate of interest increases then so will your repayments.

There’s usually no early repayment charge, so you can switch mortgages or pay in full at any time.

Whilst a standard variable rate (SVR) mortgage fluctuates based on a lender’s own SVR, a tracker mortgage follows the Bank of England's official borrowing rate, sometimes known as the base rate. This means that your repayments can occasionally go up or down based on economic changes.

Tracker mortgages usually track above the base rate, so you’ll be agreeing to a fixed percentage over the base rate for a fixed term. These particular mortgages can be popular during periods of falling interest rates, but there are a few things to consider:

• If the base rate decreases, so do your repayments.
• If the base rate increases, so do your repayments. 
• You’re locked into a fixed term, even if interest rates jump.

Some tracker mortgages have an interest rate ‘floor’ or ‘collar’ that means your interest rate cannot fall below a certain percentage and may affect how much repayments can decrease.

A discounted variable rate mortgage offers a discount off the lender’s standard variable rate (SVR) over a fixed term. There are a few things to consider when deciding if this is the right mortgage for you:  

• You’ll pay a lower interest rate than the SVR during the fixed term. 
• If the SVR decreases, then so will your repayments. 
• Early repayment charges can sometimes be lower than fixed-rate deals. 

 Whilst your term is fixed, your monthly payments aren’t so they could still go up.

Some discounted variable rate mortgages have an interest rate ‘floor’ or ‘collar’ that means your interest rate cannot fall below a certain percentage and may affect how much repayments can decrease.

At Furness Building Society we have four types of variable mortgage rates available: 

1. Standard Variable Rate (SVR)
2. Buy to Let Standard Variable Rate (BTL SVR)
3. Mortgage Variable Rate (MVR)
4. Buy to Let Mortgage Variable Rate (BTL MVR)

It’s important that all customers understand the implications of moving from a standard variable rate to a mortgage variable rate, as once you have made the change you will not be able to transfer back.

Some customers will have a mortgage deal which will move to one of the variable rates or ‘underlying rates’ above when their introductory fixed, tracker or discounted deal comes to an end. 

If you’re an existing customer and you're not sure what type of mortgage you have, please get in touch with Furness Direct on 0800 220 568. Alternatively, you can find more information about switching your mortgage here.

Having a fixed rate can often provide customers with a sense of security knowing that their payments will remain at an amount they’re happy to pay, over a set time. Whilst a variable-rate mortgage can go up or down depending on the base rate. Like any mortgage, it’s important to consider all your options before selecting the one that’s right for you. 

A few points to consider about fixed-rate mortgages include: 

• You know how much you’ll pay each month, helping with monthly budgeting.
• Your payments will not go up during the fixed term.
• If market rates drop, you wouldn't benefit from lower repayments.
• There's usually a charge for leaving a mortgage during the fixed term.

Inflation doesn’t affect a fixed-rate mortgage during the fixed term. So, if you currently have a fixed-rate mortgage, higher inflation won’t impact your monthly payments until your fixed term ends. 

Many homebuyers opt for a fixed-rate mortgage for the peace of mind it brings.

If you don't take any action when your mortgage’s fixed-rate period ends, your mortgage provider will automatically transfer you to their standard variable rate (SVR). The SVR is the default rate that your provider offers. As it’s variable, it can fluctuate over time.

At Furness Building Society, we can offer fixed-rate mortgages on two, three and five-year terms. 

Is a 2-year or 5-year fixed mortgage better?

When choosing between a two-year fixed mortgage and a five-year fixed mortgage, there isn’t a straightforward answer. The choice ultimately depends on your unique financial situation and goals. While two-year fixed mortgages typically offer lower interest rates, five-year fixed mortgages provide greater stability in the long run because you're locked into a fixed rate for a longer period.

You can switch your variable-rate mortgage to a fixed-rate mortgage at any time. However, keep in mind that if you’re currently in a deal period, like a discounted variable mortgage, there might be an early repayment fee if you choose to switch your mortgage to us. 

Take a look at our fees pages for more information on mortgage fees and charges. 

If you’re a new customer looking to switch to Furness,  give us a call at 0800 781 4311 or use our mortgage finder. For existing customers, you can find more information on switching your mortgage here.