Discounted
Interest Rate Mortgage
The discount mortgage rate is another variation of the standard
variable rate. It provides a discount from the lenders SVR for a
fixed period of time agreed between borrower and lender. Quite often
the larger the deposit you provide the larger the discount will
be. The same rule sometimes applies if the property price is very
high. The interest rate still fluctuates, meaning your monthly repayments
may differ slightly from month to month, but the discount remains
constant. A discount rate mortgage is an incentive scheme used by
mortgage lenders to attract new customers. Some discounted rate
mortgages also include an element of cash back.
A discount rate mortgage might be most beneficial to first time
buyers as the savings made in the early years of the mortgage could
be used to furnish the house.
However, once again early and overhanging redemption penalties
almost always apply so its worth finding out the lenders SVR as
well so you know how much you'll be paying once the discount period
ends. You may also be charged arrangement fees and possibly a MIG.
For meanings of terms please refer to glossary (see left information
menu).
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