Return to the Mortgage Glossary Home to view explanations for all mortgage terms. What follows is the definition for the term Discounted Mortgages as it relates to mortgages in the UK. Discounted MortgagesThis is simply a percentage discount off the lender's variable rate. So your monthly payments will move up and down in accordance with the lender's normal rate but you'll be paying at a reduced rate over the relevant time period. These are quite good for first-time buyers as a discounted mortgage can give you a couple of years of breathing space. A one or two per cent discount is especially good if there's no lock-in period afterwards because you can simply re-mortgage with another lender when the discount period comes to an end. Unfortunately, you'll often find you're locked in for another couple of years on the variable rate -- so you won't be able to get out of this sort of deal unless you're prepared to pay huge redemption penalties. Discount mortgages offer good value for money - but only if there is no lock-in period once the discount has come to an end.
| ||