Discount Rate Mortgages

A discount rate mortgage is a product which allows a borrower to have a variable rate mortgage with a fixed percentage reduction for a set period of time. For example a discount rate might be 2% below the lender's standard variable for 3 years. This kind of mortgage can also be expressed as a fixed percentage above the Bank of England base rate making it quite similar to a tracker rate. Some lenders will offer products where the discount rate is variable over time, an example of this would be; 3% discount in year one, 2% in year two, and 1% in year three before finally reverting to a standard variable rate or a tracker rate.