How do discount mortgages work?
Mortgage lenders have their own interest rate known as the standard variable rate (SVR). This rate is designed around the Base rate set by the Bank of England. It is important to remember that lenders offer various rates that can fluctuate at different percentages; usually this is no more than 3 or 4 per cent over the Base rate.
Mortgage lenders will offer different discount rate mortgage offerings, they will all offer a period where the discount applies but some have staged discount levels where the rate of discount decreases over the term of the mortgage.
It is also uncommon for some mortgage lenders offering these types of products to charge some form of arrangement fee and may incorporate conditions where you can be penalised and charged for early redemption. This where you decide to pay back the mortgage before the end of the agreement,
Discount Mortgage Rates
Unfortunately, the discount rate the lender offers
you will not last for the whole of the mortgage and therefore the
lender will revert you back to the standard variable rate after
a period of time.
Generally discount periods can last for up to three years. The simple rule to remember here is that if you have a short period of discount you can expect a high discount percentage and equally longer discount periods would qualify for smaller discounts.
Where can I get a discount rate mortgage?
To save yourself time and hassle why not complete our simple mortgage enquiry form below and then let us do all the work for you. We will search the mortgage market and put you in touch with the right mortgage provider