Discounted Rate

Interest rates

Some lenders offer mortgages where the initial interest rate is set at an amount below their standard variable rate for a set period of time. At the end of your discounted rate period, your lender will usually change your interest rate to their standard variable rate (SVR). It’s a good idea to review your mortgage at this stage because the lender’s SVR may not be the best deal around.

Advantages

  • Your payments should cost you less in the early years, when money may be tight. But you must be confident you can afford the payments when the discount ends.

Disadvantages

  • Your monthly payments can go up or down which can make budgeting difficult.
  • If you want to repay the mortgage early, there could be early repayment charges.