Discounted Variable Rate Mortgages
Buying your dream house has never been easier with the wide range of mortgage options that are currently available in the UK. You can be sure to find a mortgage that will suit your lifestyle and serve your specific needs.
The process of choosing the right mortgage can be a daunting task. Before you go hunting for the perfect mortgage you need to know your options. Fixed, flexible, variable, and discounted variable rates are just a few of the many mortgage alternatives.
Your Need To Know Options
Before you get confused, here are a few things you must know about your options:
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The fixed mortgage is a classic type of mortgage where your interest rates remain the same throughout the term of the loan. Meaning the first and last payment you make will basically be the same. Some people prefer this type of mortagage because of the security it gives. It allows you to allocate a certain amount from your monthly income for the mortgage payment without worrying about rates fluctuating.
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With a flexible mortgage you have the advantage of payment holidays without incurring penalties. The flexible mortgage allows you to reduce or even skip payment when necessary. You can also make extra or advanced payment whenever you can. If you’re work is not the typical 9-5, Monday to Friday job, this type of loan is worth considering.
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In a variable rate mortgage, your monthly payments and interest rates are not fixed. Mortgage rates may rise and fall, depending on the current standard rate of interest. Most borrowers choose this type of mortgage when the interest rates are on an all time high - with the belief that it will ultimately start to fall.
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While some people are quite comfortable with a variable rate mortgage, some choose to push it higher and get discounts for an agreed period. Discounted variable rates are a popular choice because it allows the borrower breathing space at the start of the mortgage towards the end of the period.
The Mortgage Lenders Variable Deal
A discounted variable rate mortgage option is offered by lenders as a variable deal. The lender will give you a discount at the beginning of your mortgage, should you decide to commit with their variable rate. The period covered by the discount usually last from one to five years. At the end of the agreed period, your mortgage will be switched back to the standard variable rate mortgage.
Discounted variable rates do not necessarily translate to a fixed payment. Since it technically still is a variable rate mortgage, you follow the same concept. So if you are granted a 2% discount, you pay 2% less than the current standard rate. Your payment rises and falls as the variable rate goes up and down.
If you are a first time home-buyer then discounted variable rates will be perfect for you. This type of mortgage will allow you to cope with the inevitable expenses of setting up a home.
