Discount Rate Mortgages

Discount mortgages are a type of variable rate mortgage that track below a lender's standard variable rate (SVR) for a set period of time. If a lender has an SVR of 4.5% and the discount is 1%, the rate you'll pay will be 3.5%. As with a tracker mortgage if the lender raises their SVR, your discounted rate and the amount of your monthly mortgage payment will also increase.

Most of discount rate mortgage deals last for a set period of time - typically 2-3 years, but there are some lenders who offer longer terms. At the end of the discounted rate term, your mortgage lender will usually transfer you onto the SVR with no discount applied. Ahead of this it's always advisable to speak with an independent mortgage broker to look at your personal situation and shop around for the best available deal.

Why speak to a mortgage adviser?

Before decided to opt for a discount mortgage from the below table, it's important to speak with an independent mortgage expert. Our advisers at John Charcol will be able to assist you in comparing products from across the mortgage market to help you decide which mortgage type and product is best for you and your individual needs. If you can get a better deal using another mortgage product our experts will let you know.

Current best discount deals mortgage deals:

If you're interested in discount rate mortgages the table below highlights our pick of the best discount mortgage deals currently available.

Initial Rate
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Total amount of credit
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Monthly repayments
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Scheme fees
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Total amount payable
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Overall rate
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Max Loan to value 80%: 2 Year 1.39% Discount.
Initial Rate
1.39% - Standard Variable with 4.31% discount for 2 years then 5.70% Variable for term
Total amount of credit
£360,000
Monthly repayments
£1,421
Scheme fees
£2,124
Total amount payable
£637,123
Overall rate
5.00% APRC

Fees and charges:

Booking Fee£299
Arrangement fee£1,800
Valuation fee£0
Other fees£25
Cashback£0

Flexibility:

Overpayments allowed?5% per annum
Early Repayment Charges£150, plus (3% until 30/06/2018, 2% until 30/06/2019)

Other info:

Exit fee£150
Basic legalsPayable
Special DealFree valuation for properties up to £500,000. Free legal service for remortgages.
Call now for more information: 0344 346 3672
Representative example A mortgage of £360,000 payable over 25 years on a repayment basis, initially on a discount rate for 2 years at 1.39% and then on a variable rate of 5.70% for the remaining 23 years would require 25 payments of £1,420.57 and 275 payments of £2,179.40. The total amount payable would be £637,123 made up of the loan amount plus interest (£274,849) and fees (£2,274 which includes exit fees of £150).The overall cost for comparison is 5.00% APRC representative
Max Loan to value 75%: Flexx variable rate for term
Initial Rate
1.55% Flexx Variable for term which is managed by Coventry Building Society
Total amount of credit
£337,500
Monthly repayments
£1,357
Scheme fees
£1,007
Total amount payable
£408,241
Overall rate
1.60% APRC

Fees and charges:

Booking Fee£0
Arrangement fee£999
Valuation fee£0
Other fees£8
Cashback£0

Flexibility:

Overpayments allowed?Unlimited
Early Repayment ChargesNo early repayment charge but a fee of £125 is payable when the mortgage is redeemed

Other info:

Exit fee£125
Basic legalsPayable
Special DealFree valuation (maximum £670). Free legal service for remortgages only.
Call now for more information: 0344 346 3672
Representative example A mortgage of £337,500 payable over 25 years on a repayment basis, on a flexx variable rate of 1.55% for 25 years would require 300 payments of £1,357.03. The total amount payable would be £408,241 made up of the loan amount plus interest (£69,609) and fees (£1,132 which includes exit fees of £125). The overall cost for comparison is 1.60% APRC representative
Max Loan to value 90%: 2 Year 1.79% Discount. Maximum loan £325,000
Initial Rate
1.79% - Standard Variable with 3.91% discount for 2 years then 5.70% Variable for term
Total amount of credit
£325,000
Monthly repayments
£1,344
Scheme fees
£1,949
Total amount payable
£577,466
Overall rate
5.10% APRC

Fees and charges:

Booking Fee£299
Arrangement fee£1,625
Valuation fee£0
Other fees£25
Cashback£0

Flexibility:

Overpayments allowed?10% per annum
Early Repayment Charges£150, plus (3% until 31/07/2018, 2% until 31/07/2019)

Other info:

Exit fee£150
Basic legalsPayable
Special DealFree valuation for properties valued up to £500,000. Free legal services for remortgages.
Call now for more information: 0344 346 3672
Representative example A mortgage of £325,000 payable over 25 years on a repayment basis, initially on a discount rate for 2 years at 1.79% and then on a variable rate of 5.70% for the remaining 23 years would require 26 payments of £1,343.77 and 274 payments of £1,972.37. The total amount payable would be £577,466 made up of the loan amount plus interest (£250,367) and fees (£2,099 which includes exit fees of £150). The overall cost for comparison is 5.10% APRC representative.