Discounted rate mortgages do exactly what they say. They discount the lender’s Standard Variable Rate Mortgage. For example: A lender may offer a 2 % discount on its standard variable rate mortgage for two years. With a standard variable rate of 6 %, this would make the mortgage rate 4 %. Since discounted rates are linked to SVR, they are variable, so that means if the base rate falls, the mortgage will also fall. This means a decrease in the amount of mortgage payments each month. However, rates can rise and so do the mortgage rates. Lenders may implement an SVR rise frequently and let many months pass before allowing a cut, which means the borrower will not benefit immediately.
