As the name suggests, with a variable rate mortgage, during the course of the loan the interest rate can go up or down. There may be spells of several months when the interest rate remains constant, or it can change many times over the course of a year – it all depends on the Bank of England.

The interest rate charged by the mortgage lender is largely determined by the Bank Base Rate, so when the Bank of England announces a Base Rate change, variable mortgage rates usually follow the movement (up or down).

Often, many of the lenders charge the same or very similar standard mortgage rates, but be wary of any lender that has a standard variable rate that is considerably higher than the rest, as it is not offering value for money.

Lenders quite often offer financial incentives to borrowers in order to encourage them to take a variable rate mortgage.

As a general rule, the standard variable rates offered by building societies tend to be slightly lower than those on offer at high street banks. But note that the straightforward variable rate mortgages are never the cheapest deals on offer.