In today's climate, moving from a fixed-rate to a standard variable rate (otherwise known as revert rate) will likely result in hundreds of pounds being added to your monthly mortgage bill.
But, despite this major downside, can an SVR mortgage ever be beneficial?
Here, we analyse the best and worst revert rates offered by lenders, how to avoid being put onto them, and why they should be considered in some instances.
How does a standard variable rate mortgage work?
Lenders set their own SVRs, and can raise or lower it at any time. Borrowers have no control over the changes, and have to pay the set rate.
Changes to the Bank of England base rate can influence SVRs - ie they're more likely to increase if the base rate goes up - but they're not tied to it in the same way as a tracker mortgage, which strictly follows base rate changes.
Find out more:What's happening to standard variable rates?
The average SVR offered by the UK's main mortgage providers is 7.12% - the highest it's been since April 2008, according to Moneyfacts.
That figure, which was recorded prior to last week's base rate hike, far surpasses the average rates for two-year (5.29%) and five-year (4.95%) fixed-rate deals.
The cheapest SVRs
As it stands, the lowest SVR currently on offer comes from Newcastle Building Society, at 4.91%. This is the only sub-5% rate on offer - however, the provider has announced it will be hiking the SVR to 5.19% from April in a move which 'reflects a change in market conditions and lending costs'.
The table below shows the 10 cheapest SVRs on the market, in order of cheapest to most expensive SVR.
Source: Moneyfacts
The most expensive SVRs
At the other end of the spectrum, some lenders' SVRs are surpassing 8%, with the most expensive coming from Hinkley & Rugby Building Society at 8.69%.
Source: Moneyfacts
How the biggest mortgage lenders compare
Compiled from Moneyfacts data, the graph below shows how the 10 biggest mortgage lenders in the UK fare against each other in regards to their SVR mortgages.
Out of the major lenders - which make up around 80% of the whole mortgage market - Virgin Money has the priciest SVR at 8.24%, while Coventry Building Society is the cheapest at 6.74%.
Rachel Springall from Moneyfacts says borrowers will be in for a shock if they are about to revert from a low fixed-rate deal to an SVR.
'The margin between the average two-year fixed rate taken out two years ago and the average revert to rate for this March stands at 4.55%, the largest margin on Moneyfacts records,' she said.
'Borrowers must therefore ensure they carefully consider the mortgage options available to them, particularly fixed rates, if they want peace of mind to secure their monthly repayments.'
How to avoid your lender's SVR
More than 1.4 million homeowners whose fixed-term mortgages are due to come to an end this year will face price hikes when they transfer onto a new term.
While there is no escaping the harsh reality of increased mortgage costs, homeowners can get ahead of the game to ensure they don't get put onto a new term without any say.
Therefore, remortgaging onto a new deal before your existing one expires is a shrewd move as it prevents you from being put onto a default SVR.
You can usually lock in a new mortgage up to six months before the end of your fixed term, so it's worth shopping around ahead of time to secure the best possible rate.
Find out more:Are there any positives to standard variable rate mortgages?
While the interest rates are sky-high, an SVR can prove to be beneficial in certain situations.
For one thing, they tend to offer more flexibility, which can be good if you're plan to remortgage or move house in the near future, as you're unlikely to face an Early Repayment Charge - this is a penalty for repaying your loan sooner than the term.
So, if you've got the cash to overpay or even clear your mortgage, transferring to your lender's SVR could prove useful as you'll be able to do so without having to pay a fee.
If you happen to be with a lender with a lower SVR, your monthly repayments may not be too high.
Find out more:source https://www.which.co.uk/news/article/mortgage-rates-price-gap-between-fixed-rate-and-svr-mortgages-reaches-record-high-aZmEh2p15wj1