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Mortgage Advice Center - Discounted Rate Mortgage
A discounted rate is a discount from the normal variable interest rate. This will be fixed for a set period of time for example 1.5% for 2 years. At the end of the discounted period the rate will revert back to the lenders variable rate.
A dicounted rate is a dicount from the normal variable interst rate. This will be fixed for a set period of time for eaxample 1.5% for 2 years. At the end of the dicounted period the rate will revert back to the lenders variable rate.
Some mortgage products offer a stepped discount which will have different discounted rates for each year for example 1.0% for the 1st year, 1.6% for the second and 2.1% for the 3rd year.
When taking out a discounted rate mortgage an arrangement fee is usually charged which is usually between £100 and £500
An early repayment charge usually appears, which will come into affect if you partly or fully repay the loan during the discounted period.
Unlike a fixed product the dicounted rate allows you to take advantage of any rate decreases. However if the interest rates rise there is no protection.
Contact the mortgage advice centre to talk about discounted rate mortgages.
Think Carefully when securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.