Jargon Buster - Definition of Variable Rate Mortgage
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- Variable Rate Mortgage
is a type of mortgage whereby the interest rate will change as the Bank of England base rate changes. This means that if the base rate increases, then so will the interest rate for variable mortgages. If however the base rate decreases, then the interest rate for the mortgage will go down.
One advantage of variable rate mortgages is that they often allow the borrower to make overpayments as and when they wish without incurring a charge, unlike typical fixed rate mortgages where overpayments may only be allowed at an additional cost.
Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.
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