Comparing mortgages can be confusing. When you look at mortgage interest rates, you’ll see three different numbers: initial rate, standard variable rate, and annual percentage rate of charge. It’s important that you understand what these different rates mean.
When you take out a mortgage, you’ll usually sign up for an initial promotional deal at a fixed rate or a variable rate, such as a tracker.
These deals are for a set length of time, with two-year and five-year deals being the most common.
The interest rate quoted for the initial period only applies during this time.
Standard Variable Rate (SVR)
Once your initial rate ends, you’ll automatically be moved onto your lender’s standard variable rate (SVR).
Generation Home’s SVR can be influenced by the Bank of England’s base rate, but can also be changed independently.
This usually means higher monthly repayments. Because of this, you may want to switch to a new deal when the initial deal ends.
Annual percentage rate of charge (APRC)
The APRC takes into account the initial rate, all fees and charges and the SVR.
It then calculates how much the mortgage would cost you each year if you were to stick with the same product until your mortgage is fully repaid.
But you probably won’t stay with the same product for the full life of your mortgage.
Therefore, it’s a good idea to compare deals each time your initial rate comes to an end and switch to a more competitive deal if necessary.
What will my interest rate be?
The interest rate will depend on what Loan To Value (LTV) band you are in. Your LTV is the percentage of property value that requires a mortgage. You provide the remaining percentage as your deposit. You can find more information on LTV here.
You can view our interest rates here.
Your rate will also depend on whether you choose a product with or without a product fee. Our product fee is £999. Your mortgage advisor will ask you for this fee when it is needed.
You will be able to discuss which option is best for you with one your mortgage advisor as well.