A discount mortgage tracks the lender’s Standard Variable Rate at a lower point for a period of time before eventually reverting to the higher SVR. It is possible that with the right discount mortgage and favourable macroeconomic conditions the borrower could save a significant amount of money by choosing a discount mortgage over a fixed-rate mortgage. But there is no guarantee. If you are investigating discount mortgages in Crystal Palace it would behove you to contact the pros at Mortgage & Lifetime Solutions before making any decisions.
About Discount Mortgages in Crystal Palace
As we mentioned the rate on the discount mortgage tracks the lender’s SVR, but at a lower point. So if the lender’s SVR is 4% and they offer a discount rate that’s 1.25 points lower then the discount rate would be 2.75%. If the SVR rose to 6.5% the discount rate would rise in lockstep to 5.25%, and so on.
Since SVRs tend to be higher than fixed rates these days the market for SVR mortgages is not what it used to be. Still, there may be circumstances that would make a discount mortgage a smart choice. A lot depends on the borrower’s willingness to accept risk.
For instance, they may decide to accept a discount mortgage over a fixed rate because it provides them savings now, and they believe interest rates will remain low for the foreseeable future. If those rates don’t stay low the borrower could end up paying more than they would have if they had selected a fixed-rate mortgage.
