Discounted Rate Remortgages

Discounted rate remortgage is a type of remortgage where the interest rate is set at a certain amount less than the lenders' standard variable rate for a specified period of time. It is a type of variable rate mortgage where monthly repayments rise and fall with time but remain below the SVR. Also, the longer the discount period lasts then the smaller the discount rate is likely to be. At the end of the discounted period, the mortgage rate will get back to usual SVR(standard variable rate).

Discounted rate mortgage usually lasts usually for the time period of two years,  however, these days some of the lenders have extended it fro the period fo 3-5 years. One of the most important thing to take care while selecting for a discounted rate remortgage is that they don’t have an extended redemption penalty period. Extended redemption periods enables you to change your mortgage without being charged a penalty for redemption. Apart from that, it also helps you to get tied to the mortgage lender at the variable rate for a number of years after the discounted rate period ends.

Remortgaging at Discounted rate offers a definite advantage of lowering the interest rates that get reflected through low monthly payment. Also, you will get to pay lower mortgage payments with the fall in lender’s standard variable rate.

Talking about the drawbacks of discounted rate remortgage, as the policy states you might have to pay more after the discounted period ends, as per the lender standard variable rate. Along with that, in the case of early redemptions you might have to pay more. Also, there is an application fee which is charged when organizing for the discounted rate remortgage.

Thus, if you were planning on taking a discounted remortgage then think well as you might end up paying more than fixed rate when there is an increase in SVR.