Compare our best variable rate mortgages

Variable rate mortgages have interest rates that change. The mortgage rate and your monthly repayments can go up or down. The best discount and tracker mortgages compete with fixed rate mortgages. Compare our best discount and tracker mortgages, or explore our guide to learn more about variable mortgages.

Property price

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Mortgage amount

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Mortgage term

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Initial rate type

Deal length

Repayment type

Our best variable rate mortgages

  • Monmouthshire Building Society 2 Year Variable mortgage

    Initial rate 1.65%. APRC 3.9%. Set-up fees £0
  • Monmouthshire Building Society 2 Year Variable mortgage

    Initial rate 1.9%. APRC 4.1%. Set-up fees £0
  • Cumberland 2 Year Variable mortgage

    Initial rate 1.91%. APRC 4.1%. Set-up fees £1,999
  • Cumberland 2 Year Variable mortgage

    Initial rate 1.91%. APRC 3.9%. Set-up fees £1,999
  • Barclays 2 Year Tracker mortgage

    Initial rate 1.92%. APRC 3.4%. Set-up fees £999
  • Cumberland 2 Year Variable mortgage

    Initial rate 1.99%. APRC 3.8%. Set-up fees £999
  • Cumberland 2 Year Variable mortgage

    Initial rate 1.99%. APRC 3.9%. Set-up fees £999
  • Monmouthshire Building Society 2 Year Variable mortgage

    Initial rate 1.99%. APRC 4.3%. Set-up fees £0
  • Nationwide Building Society 2 Year Tracker mortgage

    Initial rate 1.99%. APRC 3.4%. Set-up fees £999
  • Cumberland 2 Year Variable mortgage

    Initial rate 2.09%. APRC 3.9%. Set-up fees £999
  • We've found 90 mortgage deals

    Monmouthshire Building Society

    2 Year Variable

    Initial rate

    1.65%

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £691.94

    for 24 months

    Monmouthshire Building Society

    2 Year Variable

    Initial rate

    1.9%

    APRC

    4.1%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £712.30

    for 24 months

    Cumberland

    2 Year Variable

    Initial rate

    1.91%

    APRC

    4.1%

    overall cost for comparison

    Set-up fees

    £1,999

    Monthly payment

    £713.13

    for 24 months

    Cumberland

    2 Year Variable

    Initial rate

    1.91%

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £1,999

    Monthly payment

    £713.13

    for 24 months

    Barclays

    2 Year Tracker

    Initial rate

    1.92%

    APRC

    3.4%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £713.95

    for 24 months

    Cumberland

    2 Year Variable

    Initial rate

    1.99%

    APRC

    3.8%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £719.73

    for 24 months

    Cumberland

    2 Year Variable

    Initial rate

    1.99%

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £719.73

    for 24 months

    Monmouthshire Building Society

    2 Year Variable

    Initial rate

    1.99%

    APRC

    4.3%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £719.73

    for 24 months

    Nationwide Building Society

    2 Year Tracker

    Initial rate

    1.99%

    APRC

    3.4%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £719.73

    for 24 months

    Cumberland

    2 Year Variable

    Initial rate

    2.09%

    APRC

    3.9%

    overall cost for comparison

    Set-up fees

    £999

    Monthly payment

    £728.02

    for 24 months

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    Representative example:

    If you borrowed £200,000 payable over 25 years, with an initial fixed-rate for two years at 4.79%, your monthly payments would be £1,144.84 for 24 months. This would then revert to a standard variable rate (SVR) of 4.24% for the remaining 23 years, costing £1,086.24 per month for 276 months. Overall cost for comparison is 4.5% APRC representative. The total amount payable over the full term would be £328,272, including product fee of £995 and interest of £127,277.

    Your home may be repossessed if you do not keep up repayments on your mortgage.

    What is a variable rate mortgage?

    Variable rate mortgages, as the name suggests, have interest rates that are variable. They can move up or down and usually do so in line with the UK economy and the Bank of England’s base interest rate (currently just 0.10% after an emergency rate cut prompted by the Covid-19 pandemic). There are three main types of variable rate mortgage: standard variable rate (SVR), tracker and discount-rate.

    What is a standard variable rate mortgage?

    SVRs usually move with the Bank of England’s base rate, but they do not have to and may not change by the same amount the base rate did.

    Since the base rate fell from 0.75% to 0.10% in March 2020, not all lenders have passed the full 0.65% cut on to their tracker mortgage customers. You will generally find yourself on a standard variable rate mortgage if you stick with the same bank or building society when your mortgage deal comes to an end.

    In most circumstances, this is a situation you should try to avoid. It will mean paying a higher interest rate than you have been, missing out on the best mortgage rates, and shelling out more in monthly repayments.

    You can currently get a 2-year fixed rate mortgage with a rate as low as 1.1%, so paying an SVR of 4% could easily push up your repayments by several hundreds of pounds per month. That’s why it’s a good idea to start shopping around for a new mortgage about three months before your existing deal is due to end.

    What are the benefits of an SVR mortgage?

    Languishing on a high interest rate mortgage (which most SVRs are) might sound ridiculous, but there are some instances when it could work in your favour.

    An SVR mortgage can sometimes be a suitable short-term solution. For example, if you’re in the process of moving house, you’ve not found a decent portable mortgage, or your moving date does not quite match up with the end date of your current mortgage.

    The reasons for this include that you’re generally allowed greater flexibility than with fixed-rate or discount-rate mortgages. Most standard variable rate mortgages allow for unlimited overpayments, for example, and as you’re not on an offer with an end date (such as a three-year discount-rate), you will not be charged early exit fees if you want to switch your mortgage.

    You also avoid set-up or arrangement fees when you’re put on your lender’s SVR from your previous mortgage product - although this saving will not equal the extra money you will pay on an SVR mortgage over the longer term.

    Whatever your situation, make sure you do your sums first. Check you’re not throwing money away by sticking with an expensive standard variable-rate mortgage.

    What is a tracker mortgage?

    Tracker mortgages are variable rate mortgages that follow, or “track” an external rate – almost always the Bank of England’s base rate.This means that if the base rate goes up (or down), so does the interest rate on your mortgage, thus altering your monthly payments.

    Although trackers follow the base rate, they do not exactly mirror it and are ordinarily a set percentage above or below the base rate itself. Before the financial crash in 2007, tracker rates were usually set below the base rate (which was 5.75%), but now that the base rate is so low (0.10%) tracker rates are invariably set above it.

    For example, a tracker mortgage might offer you an interest rate of the base rate (0.10%) plus 1%. So the amount of interest you would pay in total is 1.10%. At present, (2020) that’s about the best tracker mortgage rate you can find. It’s also around the level of the best two year fixed rate deals, although with a tracker your interest rate may change within two years - to say 2% if the base rate went up to 1%.

    Tracker mortgages are usually fixed at a set amount above the base rate for a period of time: 2, 3, 5 and 10 years are the most common terms.

    Generally speaking, the longer the length of the deal, the higher the interest rate. So, the rate for a 10-year tracker mortgage might be the base rate plus 3%, setting your interest at 3.10% according to the current rate of 0.10%. Introductory offers on tracker mortgages can often be very attractive and have historically been lower than fixed-rate mortgage deals. As explained above, however, there’s currently very little difference between the best mortgage rates on fixed and variable rate deals.

    Collar and cap rates

    Although tracker mortgages follow an external rate, your lender can apply what’s known as a “collar rate”, which is a minimum rate for your mortgage repayments. This means that even if the base rate were to drop below the collar, your interest rate would not. What this does is safeguard the lender against negative interest mortgages – where the lender would pay you interest, rather than the other way around.

    The opposite of a collar rate is a “cap rate” or maximum rate of interest you could have to pay. Not offered by all lenders, this could be worth having in the current low interest rate environment, even though it will only generally protect you if the base rate goes up very dramatically. Ask your lender or broker directly if your mortgage includes a cap and/or collar rate, and check your key facts illustration closely.

    What is a discount-rate mortgage?

    A discount-rate (or discounted rate) mortgage offers a discount on the lender’s SVR for a set amount of time – usually two or three years.

    Although the discount itself is set in stone (say at 2%), your repayments could go up or down if the lender’s SVR changes - usually, but not always, in line with the base rate.

    For example, if the lender’s SVR is 4% and the discount rate is 2.5%, your interest rate will be 1.5%. But if the SVR goes up to 4.5% (which it can do at any time at the lender’s discretion), your mortgage rate would increase to 2%.

    Ultimately, it is not the rate of the discount that matters, but the actual amount of interest you’ll be paying the lender every month.

    That’s one reason most people prefer a tracker mortgage that follows the Bank of England base rate; there is no danger of the lender choosing not to pass on any base rate cuts, or randomly deciding to increase its SVR.

    With a discount rate mortgage (as with a fixed term tracker mortgage), it’s also important to plan to avoid automatically reverting to the lender’s full SVR at the end of the deal, as this could be extremely costly.

    Should I get a variable rate mortgage?

    It all depends how comfortable you are with risk – both emotionally and financially!

    There’s no getting away from the fact that variable rate mortgages are more risky than their fixed rate counterparts, because rates could go up at any time. If you’re not prepared for an increase, or they go up more than you can afford, you could find yourself in real financial trouble.

    That’s why it is vital to ask yourself if you could afford the monthly repayments if rates went up significantly, and use a mortgage repayment calculator to make absolutely sure. The pay-off, so to speak, with a variable rate is that if rates go down, you will pay less. This means you could be quids-in compared to someone on a fixed-rate mortgage, which stays at the same level for the duration of the deal regardless of external rates and the market at large.

    However, with the base rate currently just 0.10% (2020), you have to ask yourself, how much lower interest rates can go?

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    Last updated: 10 August, 2020