Standard Variable Rate Interest
When considering a remortgage, there are two main types of interest rate types to choose from to accompany your loan. Those two types are fixed rate and the more popular standard variable rate.
The standard variable rate varies with changes to the base rate of the Bank of England. The main purpose for having any interest rate affixed to a loan from a lender is so that the lender can be profitable doing what its core business is, lending money. The lender is basically passing the interest rate risk to the borrower. The borrower benefits if the interest rate falls and the lender benefits if the interest rate rises. The standard variable rate interest loan is the most popular type loan to remortgage in the UK. They are also usually less expensive than fixed rate remortgages. The interest rate for a standard variable rate type remortgage loan will also start out lower than the fixed rate. This is due to the inherent rate risk. Just because the rate starts lower is no indication of what the loan rate can peek at. So make sure and estimate if a much higher monthly payment can fit into your budget. The added risk of the standard variable rate type of remortgage can in the long run pay off nicely. Just go visit a remortgage specialist to make sure that it is the right type for you.