Variable Mortgage

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The most common type of mortgage isn't always a safe bet

The most common mortgage on the market is the variable mortgage, which offers low interest rates and is available everywhere. However, variable rates aren't always a safe bet because if interest rates rise, you could struggle to meet your monthly payments and if they fall, the lender might not reduce its rates.

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It's a common misconception that if you have a variable mortgage and the Bank of England base rate falls, so will your mortgage payments. In truth, that's entirely dependent on your lender: unlike a tracker mortgage, which guarantees to mirror the movements of the base rate, variable mortgage lenders don't have to cut their interest rates if they don't want to. In practice most of them do, but not always by the same amount.

A variable mortgage is one of the simplest mortgages, because there aren't any discount periods, fixed interest rates and so on. As a result arrangement fees and APRs tend to be low, and the less you borrow the better the rates become: for example you'll get a much better interest rate with an 80% mortgage than you would with a 95% mortgage.

Apply for a free variable mortgage quote