UK Mortgages - Discounted Interest Rate Mortgage

Keeping you mortgage affordable - Discounted rate mortgage are a guarantee from your lender that you will pay lower than the standard variable rate over a period specified by the mortgager. Even if the standard variable rate rises and falls, the discount will remain at the same level.

Lenders

Why would a lender offer you a discount on a mortgage? simple they want your business in the ever more competitive mortgage market.

A discounted rate works in the same way as a variable rate mortgage, During the initial period and sometimes throughout the lifetime of the mortgage, the lender will offer you a discount off the standard variable rate.

Discount Mortgage Rates are set at a percentage lower than the standard variable rate, SVR. They are fixed for a set length of time, normally the lower the term chosen to enjoy the discount, the higher the discount granted.

Of course with the discounted rate mortgage you do not get the security of a capped or fixed rate mortgage but if interest rates are unlikely to fluctuate greatly you could stand to save thousands of pounds.

How much discount?

The shorter the discount period is the better the discount, periods can range from 6 months to more than five years.

Remember you will be tied to the lender for the term of the discount unless you pay a penalty, and after the period has ended your repayments will increase proportionally with the amount of discount that was granted.

For meanings of terms please refer to glossary