SVRs after initial rate

gavynn

Hi
After the initial rates given by mortgage providers they state their Standard variable Rate.
I was wondering if the SVRs actually are going to be that figure or can it really be anything, how do they arrive at the figures they state and might that rate only be for a month or something then change again?

CLAPTON

they can and do change the SVR whenever they like.

gavynn

ahh, so when they say rate after initial rate, it could be anything?
They give the current rate but this could be grossly inaccurate in 3, 4 or 5 years time?

_Andy_

gavynn wrote: »

but this could be grossly inaccurate in 3, 4 or 5 years time?

Yes but of course a lender can only tell you/give an idea of what the rate is now.

As above, an SVR can be anything a lender wants

CLAPTON

gavynn wrote: »

ahh, so when they say rate after initial rate, it could be anything?
They give the current rate but this could be grossly inaccurate in 3, 4 or 5 years time?

indeed so; as has been the case for at least the last 50 years. (basically the meaning of a variable rate)

of course you have the option then of remortgaging elsewhere if you can get a better rate

Thrugelmir

gavynn wrote: »

ahh, so when they say rate after initial rate, it could be anything?
They give the current rate but this could be grossly inaccurate in 3, 4 or 5 years time?

In normal market conditions you could SVR's to be 2% to 3% above base. These aren't normal market conditions so quoted rates are far higher.

ACG

I wouldnt worry about the SVR too much as att he end of the deal the lender will probably have other deals available but if not you can look at other lenders (assuming everything is ok).

But even if not, the lender is unlikely to boost the SVR up to 15% as everyone would go into arrears and start defaulting, no lender wants that on their books.

efunc

ACG wrote: »

I wouldnt worry about the SVR too much as att he end of the deal the lender will probably have other deals available..

As someone concerned about the same issue, do lenders usually still charge the setup fee when you switch deals? Some of the one's I'm looking at can be as much as £1,999, meaning that there's a severe disadvantage to regularly switching deals. Thanks

opinions4u

Your own lender is only obliged (usually) to offer their own SVR when your initial mortgage product expires.

Many will have a range of alternatives. These may be more expensive than the SVR or they may include a fee. It's up to the lender to price in a way that tells you how much they want to retain your business.

Overpaying your mortgage in the early years (if your mortgage product allows) or building up a savings balance may protect you from negative equity and open up more remortgage doors with other lenders often offering cheaper deals - more equity = more choice.

ACG

efunc wrote: »

As someone concerned about the same issue, do lenders usually still charge the setup fee when you switch deals? Some of the one's I'm looking at can be as much as £1,999, meaning that there's a severe disadvantage to regularly switching deals. Thanks

I dont think a £2k set up fee is common, unless your with one of those lenders who offer ridiculously low rates but charge a massive fee which is just swings and roundabouts.

Do the sums, see which will cost you less, it might be paying a higher upfront fee and getting a lower rate... but it might not be.

getmore4less

One of the factors to consider is the lenders history of SVR, beter to look for trackers that reduce some of the lenders ability to fiddle with the rate.


Don't ignore the followon rate, because you may not be able to remortgage(lost the job/LTV changed etc. ) and/or the costs of doing so may have changed, fees vary a lot over time as the lending market changes.


Long term the best thing to do for most people once beyond their high LTV days and very tight budgets(which tend to need fixed) is to find a good low cost tracker and stick with it.