Standard Variable rate
Here's how these type of mortgages work.
The Bank of England sets a base rate. This is the basic interest rate - which is that bit on the news you've probably ignored for years when they get all excited about interest rates going up or down.
The mortgage lender's interest rate is set higher than the base rate - say 1 or 2% above it.
So if the base rate is 5% and your mortgage lender is charging you 2% above the base rate, you'll be paying 7% interest.
Now the Bank of England can change the base rate at any time. So if they raise it by 1.5% overnight the base rate is now 6.5%.
So your mortgage is now 8.5% i.e. still 2% above the base rate.
Your mortgage is variable because it goes up and down i.e. as the base rate varies
Each of the mortgage lenders have their own standard variable interest rate. They vary a great deal offering as much difference as 1%. It may not sound much but on a £100,000 loan that's £1000 per year.
Good Points: You might get lucky and see the interest rate drop.
Bad points: You might be unlucky and see the interest rate rise.