Discounted mortgages

This type of mortgage is useful if you need to save money in the first few years of your mortgage. Discounted rate mortgages provide a discount on the lender’s Standard Variable Rate Mortgage. For example, a mortgage lender may offer a 2% discount on its Standard Variable Rate Mortgage for two years. Assuming an SVR of 6%, this would provide a mortgage rate of 4%.

Discounted rates are of course variable as they are linked to the SVR, which is in turn set by the base rate. This means should the base rate fall, the SVR mortgage will quickly follow suit, meaning a decrease in your monthly mortgage payments; should they rise the opposite will occur.

This type of mortgage is therefore not for those on a tight budget as your mortgage payments could potentially vary quite a lot. However, if your funds allow a little more money to spare and rates are low, or predicted to go down, a good discount deal could save you some money.

Your home may be repossessed if you fail to keep up the repayments on your mortgage.

Why not contact us for a more detailed analysis of your requirements.