This is the normal interest rate your mortgage lender charges homebuyers and it will last as long as your mortgage or until you take out another mortgage deal.
Changes in the interest rate might occur after a rise or fall in the base rate set by the Bank of England.
- Freedom – you can overpay or leave at any time
- Your rate can be changed at any time during the loan
Their interest rates can go up or down whenever the lender decides. When the rate goes up, your monthly payments will increase; if the rate falls, your repayments will go down.
Their rates loosely follow any changes in the Bank of England base rate, but they do not have to copy its changes exactly. This means the country's economy can affect how much your mortgage costs you each month.
For example: You take out a variable mortgage at 2.5% and the Bank of England base rate later goes up by 0.75%. Your lender then increases your rate by 1% to 3.5% and you pay more each month.