A mortgage lender’s variable interest rate is set higher than the Bank of England’s standard interest rate. It’s usually set at 1-2% higher. Interest rates fluctuate so opting for this type of mortgage could either pay off, or see you paying more than you’d hoped.

For example, if the standard interest rate is 4% and your mortgage lender’s variable interest rate is set at 2% more, you’ll be paying 6% interest. If the Bank of England raise the interest rate by 1%, the interest rate on your mortgage will rise to 7%.

Interest rates vary hugely among mortgage lenders so make sure you do your research.

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