Discount mortgages are variable rate mortgages that offer a discount on the lender’s standard variable rate (SRV), usually for a period of a couple of years. Once the discount period ends the rate reverts to whatever the lender’s SRV is at that time. The only way to avoid bouncing right into the higher rate is to remortgage and get a better deal.
How do Discount Mortgages in Beckenham Work?
Every lender sets their own SRV. As we alluded to above this is the rate that kicks in at the end of any discount period. The discount rate on a discount mortgage tracks that SRV at a lower level. So, for instance, if the SRV of a particular lender is 3.5% and they offer a 1.5% discount rate for the first 2 years, the mortgage rate for those 2 years would be 3.5% minus 1.5%, or 2%.
It’s important to note, however, that because each lender sets their own standard variable rate, even if 2 lenders are offering a 1.5% discount, the actual final rate may be different in each case. Sometimes significantly different. Also, the length of the discount period may differ from one Beckenham lender to the next. Again, sometimes substantially.