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Discounted Rate Mortgage

financial_advisor 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.