The SVR Overpayment: Year by Year on an Average UK Mortgage
Using the average UK outstanding mortgage balance of £130,000 over 25 years remaining, the following table shows the monthly SVR overpayment and cumulative cost versus a best five-year fixed rate. SVR rate (2025 average): 7.5%. Best five-year fix: 4.3%. Monthly SVR payment: approximately £957. Monthly fixed rate payment: approximately £713. Monthly overpayment on SVR: approximately £244.
Note: some sources cite average SVR overpayment as higher, around £220 to £350/month depending on the specific mortgage balance used. For a £130,000 outstanding balance over 20 years remaining, the figures are: SVR payment approximately £1,042/month, fix payment approximately £800/month, monthly overpayment approximately £242. The figures converge around £220 to £350/month for the average balance range.
Cumulative SVR overpayment on £130,000 at 3.2% gap: 1 year = £2,928. 2 years = £5,856. 3 years = £8,784. 5 years = £14,640. These are the pounds directly transferred from your household budget to your lender's profit margin as a direct result of not remortgaging. Every month of delay adds another £244 to the total.
For homeowners with larger balances, the figures are proportionally higher. On £200,000 outstanding, the monthly SVR overpayment at 3.2% is approximately £375. The five-year cumulative cost is £22,500. On £250,000, the monthly overpayment is approximately £469 and the five-year total is £28,140. On any balance above £80,000, the cumulative cost of SVR versus a fixed rate over five years exceeds most people's annual salary contribution to their mortgage.
Why So Many Homeowners Stay on SVR and Pay the Penalty
If the numbers are so stark, why do an estimated 800,000+ UK homeowners remain on SVR? Research and industry analysis point to several factors. Many borrowers are simply unaware that their deal has expired and they have been moved to SVR. Lenders send notifications, but these are easily overlooked in busy households. Some borrowers believe switching is complex, time-consuming, or costly — a perception that was perhaps true in the past but is no longer accurate for a standard residential remortgage.
Others have experienced recent financial changes — reduced income, a new job, or additional debt — and fear they will not pass an affordability assessment for a new deal. While this concern is understandable, it is often unfounded. For a like-for-like remortgage (same balance, same or shorter term), affordability is assessed against the new product rate, not SVR, meaning a lower payment is being tested than the current SVR payment. Most borrowers in standard employment who have not had significant credit issues will pass an assessment for a straightforward remortgage.
A smaller group of homeowners on SVR are in a short-term transitional situation — between properties, managing a complex financial change, or waiting for circumstances to improve before locking in. For these borrowers, the flexibility of SVR (no early repayment charge) has genuine value. But for the majority who simply have not acted, the cost is pure waste.
The FCA has highlighted mortgage prisoner and SVR inertia as consumer harm issues and has taken steps to make switching easier, including relaxing some affordability requirements for borrowers switching to lower-rate deals without increasing their borrowing. If you are on SVR and have not explored remortgaging recently, the regulatory environment now makes switching more accessible than ever before.
