Discount Rate Mortgage

A discount rate mortgage offers a percentage discount from the lenders standard variable rate for a set period of time. Interest rates on this type of loan can fluctuate, therefore your payments can rise as well as fall.

When the standard variable rate fluctuates, the discount will remain fixed, however, the amount of discount and the period will vary from deal to deal.

Discount mortgages are more suitable for people who prioritise low initial payments at the risk of higher rates later on, should interest rates go up.

The discount rates last for up to five years and generally the shorter the period of discount, the higher the discounted rate will be.

In addition, you should consider that sometimes lenders can attach Early Repayment Charge for remortgaging after your discounted period has ended.

Your home may be repossessed if you do not keep up repayments on your mortgage.