Discount mortgages usually mean that there is a discount period on your mortgage where you pay less interest for a certain period of time. The discount usually lasts for two or three years, and means that for this period you will not have to pay as much in premiums each month, saving money for other things in the first few years of your mortgage, such as home improvements.
Advantages of discount mortgages include:
- Saving money and paying less in the initial years of your mortgage
- Your balance will not increase as much during this period
Disadvantages of discount mortgages include:
- Once the discount period ends, you will revert back to paying the lender’s standard variable rate, which could be considerably higher
- If, after the discount period, you wish to switch lenders, your current provider will usually charge a fee for ending your mortgage early
Discount mortgages vary in repayment terms, interest rates, and are subject to availability and status. Use our mortgage calculator to compare discount mortgages from some of the leading UK high street and online providers.