Discount mortgages offer a discount on the interest rate charge for a period of time. After this period has passed the rate reverts to the standard variable rate. The discount rate often last for the first two or so years. This rate is fixed for he period a will not be subject to increases or decreases in line with the base rate. All discount mortgages have early redemption penalties for paying the mortgage off or changing lenders. Often this redemption period is longer than the discount period. So when considering a discount mortgage you must investigate the redemption penalty period and the discount period. Often people find they have difficulty paying the mortgage once the discount period has passed and the standard variable rate applies.

This type of mortgage often attracts fees and the lender will charge an arrangement fee to set the mortgage up. All discount mortgages are capital an interest and there are 1,000s of products available in the UK.

The main put to consider is the discount period and also the standard variable rate as the penalties for early redemption far out weigh the discount. These mortgages are very popular and used correctly can save a great deal of money.

Type Of Mortgages