Discount mortgages

A discount mortgage gives you a discount on your mortgage lender's standard variable rate (SVR) for a limited period of time. This means that, although your rate will be lower than the SVR, it will still rise and fall parallel to it.

For example, if the SVR is 5% and the deal offers a 2% discount, you would pay 3%. If the SVR rises to 6% you would pay 4% interest.

How discount mortgages work

A discount mortgage is a type of variable rate mortgage. The main variables are the size of the discount and the length of time it lasts.

Every lender has a SVR which its borrowers pay if they are not on a particular deal. It can be varied by the lender at any time provided they give you notice.

With a discount mortgage you benefit from a fixed percentage discount from this SVR for a given period. You'll see the initial rate and term as advertised (say, 3% for 3 years). You'll see a "reverts to" rate (say, 5%) which is variable by the lender. So the discount is 2% and if the SVR changes, your rate will change too but will always be 2% lower than the SVR until the 3-year term is up.

Advantages of discount mortgages

A discount mortgage is a way to keep your monthly payments below the SVR for a while, which can be useful when you've just paid out the significant upfront costs associated with moving home.

As with tracker mortgages, interest rates and arrangement fees tend to be lower than fixed rate mortgages. A discount mortgage also means that it's possible for your interest rate to go down even when the Bank of England base rate stays put.

Disadvantages of discount mortgages

The main disadvantage is that, because lenders can change their SVR at any time, your interest rate (and therefore your monthly repayments) could go up when you're not expecting it. Before you take out a discount mortgage you should make sure that you could still make your repayments if your interest rate were to rise. Our mortgage repayment calculator can help you check that.

Some discount mortgages are "collared", meaning that your interest rate can't fall below a certain level. This means that if interest rates fall, you may not end up on as low an interest rate as you would on a tracker mortgage.

Once the discount period is over your rate will revert to your lender's SVR. It's possible there will be early repayment charges if you exit before the discount period is over.

Compare discount mortgage rates

We can show you today's available discount mortgage rates – just make a selection below to compare discount mortgages. You will also get an estimate of your monthly mortgage payment.


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Go direct, or get advice

If you're comfortable making your own financial decisions, our comparison service shows all of today's current mortgage deals and you can call lenders directly for more information.

If you'd prefer to get advice on choosing the right mortgage, we can put you in touch with a mortgage adviser.