Comparing mortgages can be confusing.

When you look at mortgage 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.

Initial rate

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 tracks the Bank of England’s base rate, for example.


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.

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