Variable rate mortgage
Last week we went over the pros and cons of a fixed rate mortgage and as promised today I’m going to write about variable rate!
Unlike a fixed rate, you will not have a set rate you will be paying each month so budgeting can be a little trickier. A variable rate can go up or down each month because it is linked to the Bank of England base rate (BOEBR), so if this rate decreases you would pay less on your mortgage while someone on a fixed rate continues to pay the same amount, however this can go both ways and if it went up you could end up paying more.
Unfortunately a variable rate mortgage isn’t based purely on the BOEBR, the rate is usually set between 1-2% higher and as such can make this a very expensive choice for mortgage payments. Usually this is the plan you’re put on after your introductor offer has expired which is why it can pay to shop around.
