As the name suggests, with this type of mortgage you get a percentage discount from
the Lender’s standard variable rate for a specified period of time. However, you
are still subject to any rise and fall in the in the standard variable rate and
your monthly repayments will be affected accordingly. The benefit of the discounted
rate is that initial payments are lower, although higher interest rates will be
charged later on because, once the discount term ceases, your repayments will increase
to the level of the full standard variable rate.
NB: Early redemption penalties are applicable in some instances.
Discounted rates are suitable for people who would like lower initial payments at
the expense of higher interest rates later on.
It must be noted that YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS
ON YOUR MORTGAGE.