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Discount & Capped


A discount mortgage has an interest rate where a discount is applied to the lender’s standard variable rate for a set period, usually around 2 years. As the lender’s standard variable rate moves up and down, so the discounted rate moves up and down by the same amount, with the differential between the two remaining the same.

 

Advantages

 

  • You can benefit from a lower interest rate in the first few years, freeing up money for furnishings, carpets or whatever else you want.
  • You can benefit from a fall in the Bank of England’s base rate when it results in a subsequent fall in the lender’s standard variable rate.

 

Disadvantages

 

  • Early repayment charges will almost certainly apply. This means you will be unable to change your mortgage during the ‘early repayment charge period’ without paying a fee, which may be up to the value of six months mortgage repayments.
  • The Bank of England base rate can be unpredictable and can increase rapidly, resulting in an increase in your monthly payments.
  • It is less easy to budget as the interest rate can and will vary.
  • A fall in the base rate will not always result in an equivalent fall in the lender’s standard variable rate.

 

 


 

 

A capped mortgage ensures that the interest rate does not rise above a predefined threshold, the capped rate.  The interest rate is usually the same as the lender’s standard variable rate, but will not rise above the capped rate.

 

Capped rate mortgage were available in conjunction with some discount mortgages.

 

Advantages

 

  • You can benefit from a fall in the Bank of England’s base rate that leads to a subsequent fall in your lender’s standard variable rate. At the same time you remove the risk of the interest rate increasing beyond a known level, allowing you to budget more easily.

 

Disadvantages

 

  • Early repayment charges will almost certainly apply, which may also extend beyond the end of the discounted period. This means you will be unable to change your mortgage during the ‘early repayment charge period’ without paying a fee, which may be up to the value of six months mortgage repayments.
  • You will normally have to pay an application fee when arranging your capped mortgage.

 

Your property may be repossessed if you do not keep up repayments on your mortgage.

 

For mortgages we are paid NO FEE. We will be paid commission by the lender.

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OUR CUSTOMER FEEDBACK

At Town & Country Mortgages our priority is always to provide quality advice and service to our customers.
We strive to ask all our customers to provide feedback and below are extracts from questionnaires completed by our customers in 2014.

Town & Country Mortgages were brilliant!! Having visited other mortgage brokers beforehand - everything was made much clearer to us by Town & Country  Mortgages.  Issues were dealt with quickly and concisely and every attempt made to accommodate work schedules we had. We would definitely recommend Town & Country Mortgages to anyone looking to buy a new property or re-mortgage.

Mr Rawlings July 21, 2017