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 1.30% Discount. Loans in excess of £300,000 will require individual referral.
Initial Rate
1.30% - Standard Variable with 3.99% discount for 2 years then 5.29% Variable for term
Total amount of credit
£285,000
Monthly repayments
£1,113
Scheme fees
£1,299
Total amount payable
£487,528
Overall rate
4.70% APRC

Fees and charges:

Booking Fee£0
Arrangement fee£999
Valuation fee£280
Other fees£20
Cashback£0

Flexibility:

Overpayments allowed?10% per annum
Early Repayment Charges£90, plus (2% in year 1, 1% in year 2)

Other info:

Exit fee£90
Basic legalsPayable
Special DealFor Remortgages only - Free valuation up to £335, free legal service or a contribution of £150 towards legal fees in Scotland
Call now for more information: 0344 346 3672
Representative example A mortgage of £285,000 payable over 25 years on a repayment basis, initially on a discount rate for 2 years at 1.30% (which will not go below a floor of 1.30%) and then on a variable rate of 5.29% for the remaining 23 years would require 24 payments of £1,113.23 and 276 payments of £1,664.57. The total amount payable would be £487,528 made up of the loan amount plus interest (£201,139) and fees (£1,389 which includes exit fees of £90).The overall cost for comparison is 4.70% APRC representative
Max Loan to value 75%: Flexx variable rate for term
Initial Rate
1.39% Flexx Variable for term which is managed by Coventry Building Society
Total amount of credit
£337,500
Monthly repayments
£1,332
Scheme fees
£1,007
Total amount payable
£400,669
Overall rate
1.40% 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 1.39% for 25 years would require 300 payments of £1,331.79. The total amount payable would be £400,669 made up of the loan amount plus interest (£62,037) and fees (£1,132 which includes exit fees of £125). The overall cost for comparison is 1.40% APRC representative
Max Loan to value 90%: 2 Year 1.99% Discount.
Initial Rate
1.99% - Standard Variable with 3.30% discount for 2 years then 5.29% Variable for term
Total amount of credit
£405,020
Monthly repayments
£1,715
Scheme fees
£1,854
Total amount payable
£699,891
Overall rate
4.80% APRC

Fees and charges:

Booking Fee£0
Arrangement fee£1,499
Valuation fee£335
Other fees£20
Cashback£0

Flexibility:

Overpayments allowed?10% per annum
Early Repayment Charges£90, plus (2% in year 1, 1% in year 2)

Other info:

Exit fee£90
Basic legalsPayable
Special DealFree legal service and free valuation for remortgages only.
Call now for more information: 0344 346 3672
Representative example A mortgage of £405,020 payable over 25 years on a repayment basis, initially on a discount rate (which will not go below a floor of 1.99%) for 2 years at 1.99% and then on a variable rate of 5.29% for the remaining 23 years would require 24 payments of £1,714.72 and 276 payments of £2,379.76. The total amount payable would be £699,891 made up of the loan amount plus interest (£292,947) and fees (£1,924 which includes exit fees of £90). The overall cost for comparison is 4.80% APRC representative.

Legal

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.

John Charcol is a trading name of John Charcol Limited and its Appointed Representatives. John Charcol Limited is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is 665649. Registered in England No. 9157892. Registered office address for John Charcol Limited is 5th Floor, Cutlers Exchange, 123 Houndsditch, London, EC3A 7BU. The FCA does not regulate some investment mortgage contracts. Calls may be recorded for training and monitoring.