Discounted rate mortgages — more information
There are basically two kinds of underlying
mortgage arrangement to any contract:
1. Interest only
2. Principal and interest
Compare UK discounted rate mortgage interest rates online
This page is designed to give the "pros and
cons" of the discount rate mortgages . If you want to compare
your mortgage, or look at the possibilities for a new mortgage
on discounted interest, click here:
Discount rate interest arrangements are an
interest repayment variation on a basic "principal
and interest" approach.
Basically, the discount is to win new customers.
Interest will follow the market up and down, as with a variable
rate loan, but the repayments will be less.
After an agreed period the rate will revert
to the lender's normal rate.
And guess what? The lender's normal rate will
be organised, very carefully to get back at least as much
as, and often more than, would have been the case with a
no frills, variable rate loan.
Pros: Initial repayments are less.
Cons: Most discount contracts have no let
out for the discount period, so you're stuck with their
deal for at least that long.
Don't tie yourself down to variable rate mortgages
for more than two years or so, and, as the lender is willing
to make old customers pay for new ones, every two years
go to a new lender, and be a new customer!