Discount mortgage
Trackers aren’t the only type of variable mortgage. Discounts are another. However, unlike trackers the interest rate isn’t linked to the Bank of England base rate. Instead, it’s linked to the lender’s standard variable rate (SVR) and this is a significant difference because lenders can change their SVR even if there has been no change in the base rate.
A number of lenders have done this over the past year or so, and have increased their SVRs. This means their customers with discount mortgages have seen their repayments go up even though the Bank of England base rate hasn’t changed since March 2009.
Discount mortgages are available over different terms – typically one to five years – and as with trackers and fixed rate deals you will probably be charged a penalty if you want to get out of the deal during the term.
A number of lenders have done this over the past year or so, and have increased their SVRs. This means their customers with discount mortgages have seen their repayments go up even though the Bank of England base rate hasn’t changed since March 2009.
Discount mortgages are available over different terms – typically one to five years – and as with trackers and fixed rate deals you will probably be charged a penalty if you want to get out of the deal during the term.
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