Discount Mortgages

Discount mortgages should be offered by every bank and building society that is acting as a mortgage provider. These kinds of mortgages have a discount interest rate option attached to them which means that the APR on the mortgage is at a lower rate from the provider's usual standard variable rate option. It will stay at this lower rate for a certain period of time.

How long or short that period of time is depends on the mortgage provider you go with. In many ways a financial institution's discount mortgages are only as good as their standard variable mortgages. If a financial institution has a very high standard variable rate, it means their discount mortgages are not likely to be much better.

Interest Rate Options

There are seven interest rate options to choose from. Each one of these interest rates set the APR of a mortgage in a different way. A standard variable interest rate option means that the bank or building society that is acting as the mortgage provider sets the APR of a mortgage above the official bank rate. It is down to the discretion of the mortgage provider to decide how much higher than the official bank rate they will set their standard variable mortgages at. Each bank and building society will have their own standard variable rate which will differ from another bank or building societies standard variable rate.

Getting A Good Deal

Aside from the standard variable rate that a bank or building society has, another factor which is going to influence the quality of a discounted mortgage will be the judgement a provider makes on how much lower the interest rates on their discount mortgages should be compared to their standard variable mortgages. How high or low this discount is will be largely influenced by the amount of time that a mortgage stays at a discounted rate. A provider who has particularly low rates on their discount mortgages is more likely to have this low rate for a short period of time whereas a provider who has less impressive rates on their discount mortgages is more likely to have this rate for a longer period of time.

To get the best deal on a discount mortgage you should try and check out as many offers as you can. Due to the demand for mortgages, financial institutions are frequently changing the details of their offers, including the rates on their standard variable mortgages and discount mortgages. This means you can get one bank or building society who gives a good deal whereas another will give you a bad one. So getting a good discount mortgage is largely dependent on the amount of effort you put into your search for one. One of the best places to find a mortgage with a good discount rate is the internet.

Comparative websites will be able to give you a list of all the major banks and building societies discount mortgages. All you have to do is go through this list and pick whichever provider you feel gives the best deal for you. Once you have chosen this provider you should be able to apply for your discount mortgage through the provider's website. Your application will require you to answer a wide range of questions about yourself, your property and your income. It will take a week or so for your prospective mortgage provider to process your application as they have to go through a number of checks to ensure that you are not a risk worthy borrower.

The main check they will perform will be on your credit rating. Your credit rating will tell mortgage providers how you have behaved in the past with other loans, debts and financial obligations. If you make mortgage repayments in full and on time throughout your life you will have a good credit rating. This means your prospective mortgage provider is going to be more confident that you can meet all your mortgage monthly repayments. If on the other hand you have missed a lot of debts you may have developed a bad credit rating.

A bad credit rating means you could be rejected from a provider's discount mortgages. If you do get accepted with a bad credit rating, then you will get a higher interest rate than you would have done if you had a good credit rating. Bank and building societies hike up their interest rates for bad credit borrowers to reduce the loss they would make in the event that a borrower defaults on their repayments. This is how banks and building societies justify granting loans to bad credit rate borrowers. Hopefully however, you won't run into any these problems and will be granted a mortgage that has an affordable interest rate attached to it.