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Discount rate mortgage

A discount rate mortgage offers a percentage discount from the lender's normal variable rate for a set period of time.

When the standard variable rate fluctuates, the discount will remain fixed, however, the amount of discount and the period will vary from deal to deal.

Discount mortgages are more suitable for people who prioritise low initial payments at the expense of higher rates later on; for example first time buyers, whose income isn't so high who want to have some spare cash to spend on furnishing their new home.

The discount rates last from six months to about five years and generally the shorter the period of discount, the higher the discounted rate will be.

In addition, you should consider that sometimes lenders can attach redemption penalties for remortgaging after your discounted period has ended.

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alexander hall associates limited is authorised and regulated by the Financial Services Authority for pure protection, residential mortgages and general insurance business. We do not charge a fee for residential mortgage advice; however there is an administration fee for processing each of your standard residential mortgage contracts. The typical administration fee is £499. For impaired credit lending the typical fee is 1% of the mortgage loan. For Buy to Let and Commercial Mortgages a fee of 0.5% of the mortgage loan size applies of which £500 is payable on application with the balance payable on completion.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.