Glossary: Discount rate mortgage

This is a mortgage where a discount is applied to the lender’s standard variable rate (SVR) for a set period; usually two years but also available for three and five years. As the lender’s SVR rate moves up or down in response to Bank of England base rate movements, the discounted rate moves by the same amount. At the end of the discount period, the rate reverts to the lender’s SVR – often an uncompetitive rate. If you decide to shop around for a better deal check you won’t be charged a redemption penalty should you seek to remortgage with another lender.

Relevant to: Mortgages

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