There are a lot of different mortgage options out there. That’s why we at Mortgage & Lifetime Solutions are always ready to extend our help to those who need more information about them. One of the most popular mortgages is our discount mortgage in Orpington. Find out whether this particular loan is ideal for you and your situation.
What is a Discount Mortgage?
Like any other variable interest mortgage, the monthly payments for discount mortgages may change from one month to the next.
But unlike other variable interest mortgages, the interest rate for a discount mortgage is based on the standard variable rate or SVR of the lender and not dependent on the base rates set by the Bank of England. Lenders may opt to lower or raise their SVRs at any time.
The discount part in the name is because the loan’s interest rate is usually lower than the lender’s SVR by 2%. If the lender set their SVR at 5%, for example, the rate of your discount mortgage will most likely be set at 3% – until the lender changes their SVR.
The term period of these loans may be anywhere two, three, five, or even 25 years, which is the lifetime of the mortgage.
Why Get a Discount Mortgage?
Although the amount you pay may change from month to month, a discount mortgage can still be less expensive compared to other types of mortgages in the long run.
This mortgage is generally a good idea if you don’t mind changing monthly payment amounts.
There’s also the fact that there’s a possibility that you can enjoy the discount for the duration of the loan.