Start Your Discounted Mortgage Application Today With Lending Expert!
A discounted mortgage is a home loan for which the interest rate is fixed at a set amount below the lender’s standard variable rate (SVR) either for a set period or for the whole duration of the mortgage.
These mortgages are also called ‘discounted variable rate’. The SVR is governed by the lender rather than by the Bank of England. This means that your interest rate is at the mercy of an individual lender who can lower or raise the rate by any amount and whenever they like.
At the end of any initial variable or fixed-rate period, your interest rate will change to that of the one decided by the lender. From that point onwards, the discount rate mortgage will track the SVR but at a discounted rate. For example, if the lender SVR is set at 4%, and the discount is 3%, your interest rate for your mortgage will be 2%.
Due to the lender’s ability to set their own SVR, this means that there is a great level of variability between the rates of two lenders offering the same discount. Other factors which vary from lender to lender is the length of the discounted variable rate and the amount of the discount.
Lending Expert is a discounted rate mortgage broker and can compare over 1,000 mortgage deals across the UK. Whilst high street banks can offer discounted rate mortgages too, we can help find the best option for you with rates from 1.39% per month, whether you are looking for interest only, fixed, variable, tracker or have a bad credit history.
Start by clicking on ‘Check my Eligibility’ below and enter some basic details about you and your property – and Lending Expert will be able to help you find the best discounted mortgage according to your requirements.
- Discounted variable rates
- Loan Term – 2, 3, 5 years or entire term of the mortgage (typically 25 years)
- Minimum deposit can be as low as 10% but the higher it is, the higher your chances of being approved
- Free tool to compare discounted rate mortgages
What Is a Discounted Mortgage?
A discounted mortgage, or discounted variable rate, is a home loan with an interest rate which is fixed at a set amount below the lender’s standard variable rate (SVR), rather than based on a national benchmark interest rate. This is either for a set period of time, such as 2,3 or 5 years, or throughout the mortgage.
How Much Can Discounted Mortgages Save You?
Discounted mortgages could potentially work out as being extremely cheap, especially during periods of generally low interest rates. However, discounted mortgages are always at the mercy of the lender meaning that if they change their standard variable rate, this could drastically change how much interest you are paying.
Between the lender and the borrower, there is an agreed discount rate. However, the standard variable rate can change at the whim of the lender.
Usually there is a specific set rate which the lender cannot fall below. According to 2018 statistics from Moneyfacts, around a quarter of all discounted mortgages had this set rate. These ‘collars’, as they are called, might be set at the initial rate of when you first took the deal. This means that you will not benefit from any future decreases in the lender SVR.
On the other hand, the majority of discount deals have no upper cap meaning that should the lender raise the SVR, your payments could increase significantly.
What Areas of the UK Does Lending Expert Cover as a Discounted Mortgage Broker?
We proudly offer discounted rate mortgages across the entire UK, Scotland and Wales including Birmingham, Brighton, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Nottingham, Newcastle, Sheffield and more.
How Much Can I Borrow From a Discounted Rate Mortgage?
Speak to an expert today in order to find out how much you can borrow from a discounted rate mortgage.
Can I Get a Discounted Rate Mortgage?
- Aged 25 to 85 years’ old
- Minimum income of £25,000 per year
- Good credit status
- Strong financial record (limited defaults, arrears)
Larger deposits will usually result in paying lower rates overall, since you have paid off and own more of the property. Putting down a higher deposit may also be a requirement for those individuals with limited financial records or weaker credit ratings.
What Other Factors May Impact Eligibility for a Discounted Mortgage?
Many different factors could impact your eligibility to secure a discounted mortgage.
These include, but are not limited to, the following:
- Credit score (this can affect the agreed interest rate)
- Home location
- Deposit amount
- Monthly income
- Home price and loan amount
Make an enquiry from our team of experts to find out more about your eligibility for a discounted rate mortgage.
Is a Discounted Mortgage the Best Option for You?
One of the key things to think about when deciding if a discounted mortgage is right for you is how you feel about risk versus stability.
If the initial interest rate for a discounted mortgage is significantly lower than on a fixed-rate mortgage, and you think that these rates might stay low, you could potentially save a lot of money by opting for the discounted mortgage.
However, if you are the type of person who favours stability, planning and long-term budgeting, a discounted mortgage may not give you the security and predictability you need in the long run.
What Is the Difference Between Discounted Mortgages and Trackers?
The terms trackers and discount mortgages are sometimes used interchangeably. In general, discount mortgages are thought to be slightly cheaper than trackers, but this is dependent on the lender.
With discount mortgages, the lender’s SVR is tracked, rather than the Bank of England benchmark interest rate.
As such, discount mortgages could be cheaper or more expensive than a tracker deal, which follows the base rate prescribed by the Bank of England.
For that reason, tracker deals tend to be more reliable and predictable as they are prone to far less fluctuation in price than discounted mortgages.
Discounted Mortgage Providers
Many lenders on the market offer competitive rates for discounted rate mortgages.
At Lending Expert, we compare the discounted mortgage market in order to find the best provider to suit your needs.
Rather than approaching the lenders directly and dealing with their in-house advisors, working with a mortgage broker will offer impartial advice to get you the best deal on the market.
How Do I Compare Discounted Mortgage Rates?
Working with a mortgage broker such as Lending Expert will help you find the best mortgage to suit your circumstances without impacting your credit rating.
Contact us today to speak to an expert and start comparing discounted mortgages to find the best option for you.
What To Consider Before Getting a Discounted Mortgage
Prospective buyers should always consider the following factors before deciding to take out a discounted mortgage:
- Attitude to risk
- Loan term
- Monthly income
- Will you want to repay your mortgage early
- Do you want the flexibility of switching lender
- How does the initial interest rate compare to fixed rates
What Happens if I Do Not Keep Up With Repayments?
Your discounted mortgage is secured against the property meaning that any late repayments will lead to a damaged credit score, late penalties and maybe even risk of property repossession from the lender.
The period of the discounted variable rate mortgage deal is typically between two to five years. After that, you will be subject to the lender’s standard variable rate, which is higher. At this stage, you can look to take out a new discounted deal or search for a different mortgage either with the existing provider or a new company.
Why Use Lending Expert As Your Discounted Mortgage Broker?
Working with a number of high street banks and specialist mortgage lenders, Lending Expert has access to over 1,000 mortgage deals available and is in the perfect position to help you get approved and get the best rates.
Our eligibility checker is completely free to use and can provide an indicative quote, with no obligation.
Founded in 2013, we have years of experience working in the secured loan and mortgage market and have helped thousands of customers to date. Our values have always been to find the right product for the right individual at the competitive rate – and we are pleased to offer our services for you today!