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Rate changes and your mortgage

Our mortgage interest rates are determined by a number of factors including changes to the Bank of England Base Rate.

The following guide will help you understand the different interest rates that could affect your mortgage repayments.
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What is the Bank of England Base Rate?

The Bank of England Base Rate (BBR) represents the rate at which the Bank of England lends to other financial institutions. It is reviewed several times a year by the Monetary Policy Committee (MPC).

Mortgages with a variable rate linked directly to the BBR will go up and down automatically in line with any base rate changes.

What is a Standard Variable Rate?

Many banks have a Standard Variable Rate (SVR) which is usually influenced by the cost of their borrowing.

An SVR can change at a bank’s discretion and normally determines the variable interest rates and reversion rates for mortgages linked to their SVR.

What is the Aldermore Managed Rate?

At Aldermore we call our SVR the Aldermore Managed Rate (AMR). The AMR is set by Aldermore and not directly linked to the BBR but can be influenced by changes to it as well as other market factors.

If the AMR changes, variable and discounted rate mortgages linked to it will go up and down in line with the AMR.

How will my mortgage be affected by changes to AMR?

Fixed Rate Mortgages

If you have a fixed rate mortgage your interest rate and monthly repayments will not be affected by changes to the AMR until your fixed rate ends.  When you come to the end of your fixed rate period you will move to a variable rate which will be linked to the AMR and your interest rate and monthly repayments will go up or down in line with AMR.

Variable Rate Mortgages

If you have a variable rate mortgage your interest rate and monthly repayments will be linked to the AMR and therefore will go up and down in line with it.

We will always write to you in advance to let you know of any changes to your current interest rate or monthly repayments.

If you have any concerns about keeping up with your mortgage payments, visit our Money Worries page for more information on how we can help.

Term Variable Rates

A term variable rate means the interest rate charged on the loan is linked to the Aldermore Managed Rate (AMR) for the whole term of the mortgage.  This interest rate is usually lower than the AMR and will increase or decrease in line with any changes to it.

For example, if rates increase your mortgage payments will go up and the total amount you repay over the term of the mortgage will increase. Similarly, if rates decrease, this will be reflected in your monthly payments and the total amount you pay back.

LIBOR

Types of mortgages linked to London Interbank Offered Rate (LIBOR)

  • Single residential investment units
  • HMOs
  • Multi-unit Freeholds


What is LIBOR?

LIBOR is the average interbank interest rate at which a selection of banks on the London money market are prepared to lend to one another.

How does LIBOR link to my mortgage?

If you have a LIBOR linked mortgage this means the variable interest rate on your mortgage is directly linked to 3 month LIBOR, which we review and were applicable, re-set on 15th February, May, August and November.

Any change to 3 month LIBOR will result in a corresponding change to the variable interest rate on your mortgage.

 

If you'd like to get the ball rolling or have any questions, give us a call on 0333 321 1000.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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