Discounted variable rate mortgages offer a discount on a certain interest rate, most commonly a lender's standard variable rate.
The discount can be for an introductory term of two, three or five years, or it could even be for the entire term of the mortgage (a lifetime discounted rate).
Talk to the mortgage experts now. Loans Premier Financial Group has helped thousands of people get a mortgage. (Phonelines open 8am to 8pm Monday to Friday)
_All_125x100.png)
_All_125x100.png)
_All_125x100.png)
_All_125x100.png)
_All_125x100.png)
_All_125x100.png)
_All_125x100.png)
Credit will be secured by a mortgage on your property. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Written quotations are available from individual lenders. Loans are subject to status and valuation and are not available to persons under the age of 18. All rates are subject to change without notice. Please check all rates and terms with your lender or financial adviser before undertaking any borrowing
Quick LinksQuick links are where we have an arrangement with a provider so you can move directly from our site to theirs to view more information and apply for a product. We also use quick links where we have an arrangement with a preferred broker to move you directly to their site. Depending on the arrangement we may receive a modest commission either when you press a 'Go to Provider' or 'Speak to an Adviser' button, when you call an advertised number or when you complete an application.
Weekend Moneyfacts is available free by email to all Moneyfacts.co.uk users.
Please send me Weekend Moneyfacts, Savers Friend and selected third-party offers.
BALANCED. Moneyfacts.co.uk is entirely independent and authorised by the Financial Conduct Authority for mortgage, credit and insurance products.
FREE. There is no cost to you. Our service is entirely free and you don't need to share any personal data to access our comparison tables.
TRANSPARENT. We only receive payment from product providers and intermediaries for quick/direct links and adverts through to their websites.
COMPREHENSIVE. We research the whole market and scour the small print so you can find the best products for your needs.
A guide to mortgage valuations - what they are and what aren't.
Looking for ideas about paying off your mortgage? Our helpful guide gives you the answers
Our guide to the different types of income you can use when applying for a mortgage.
Is offsetting your mortgage a good idea? Find out the whys and wherefores in our easy guide.
A discounted rate mortgage uses a variable interest rate – so your payments can go up and down. They work by offering a set discount on a lender's Standard Variable Rate (SVR). So, if the lender's SVR is currently 4.00% and the discounted rate offers a 1.00% discount, you'll initially pay 3.00% for an agreed introductory period.
Then, if the SVR goes up to 5.00% later, your discounted rate would go up to 4.00%. If the SVR goes down by 1.00%, your discounted rate would also go down by 1.00%. To find out when a lender may increase or decrease their SVR (and therefore any discounted rates linked to it), see our SVR guide.
When your introductory period comes to an end, you will most likely move onto your lender's full SVR. Discounted rates tend to come with an early repayment charge, if you pay off the mortgage early or remortgage to another lender during the introductory period. However, most will let you make overpayments – normally up to 10% of the outstanding balance per year.
If you have a lifetime discounted mortgage, the early repayment charge will probably not apply for the full term of the mortgage, but only for an initial two to five-year period (depending on your lender).
Although discounted mortgages may sound like a good deal, they're not necessarily the cheapest mortgage rates available. For example, you may be able to find a cheaper tracker mortgage. Remember: discounted mortgages have variable rates, which means you won't get the same payment security as you do with a fixed rate.
Collar rates are becoming more common since interest rates hit all-time lows. These basically mean that the mortgage rate, and therefore your mortgage payments, can only go so low. This lower limit is called the collar.
So, if a lender’s SVR was reduced to a level that sent the discounted mortgage below the collar, your payments would not go any lower than the collar rate.
Our mortgage calculator helps you to see how much your mortgage might cost you each month.
Our how much can I borrow calculator gives you a range of how much a lender might consider lending you under a mortgage. This calculation is only an indication only.
Read our How much can I borrow for a mortgage guide to find out more about what can impact your potential sum of borrowing.
