Discounted variable rate mortgages...

Discounted variable rate mortgage deals will be bound to catch your eye simply because the initial rate is likely to be very low: it is important to seek the best possible advice on discounted rates, however, because some may not be as cheap as they look. You may have seen many lenders advertising rates that seem impossibly low, sometimes even around 1%, but if you read the small print you will see that these mortgages almost always have extended Early Repayment Charges, which will be charged for some years after the initial low rate ends. The lender will charge a higher rate of interest in subsequent years to balance the low rate they charge in the early years.

It should be noted, however, that discounted mortgages are variable, and therefore the cost of these mortgages could be subject to sharp increases should the Bank of England Base Rate rise rapidly or should the lender choose to increase their standard variable rate. Specialist advice should always therefore be sought when considering these products.

However, many lenders offer discounted variable rate mortgages without extended early repayment charges, and some even offer deals that have no early repayment charge at all, leaving you free to perhaps change to another lender at a time of your choosing. These types of deals will almost always be more cost effective for the mortgage-holder, and pose less risk. It is important therefore that the details of any particular deal you are looking at are made clear to you before you decide to go for any particular product.