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mortgages: Best discounted (misspelling of mortgage)

At the time of writing, early Sept 2009, discount mortgage deals are currently topping the best buy tables.

Please note that we are not finance experts and we are not qualified to give advise on mortgages, however, we do not have to be regulated by the FSA in order to advise you HOW TO FIND the best discount mortgage, but first of all we examine just what this type of mortgage really is.

A discount mortgage means that you initially pay a rate of interest that is a set amount below the lender's standard variable rate (SVR), for a specified period of time, after which you revert to the SVR. If the lender's SVR is 6% and the discount is 2%, for example, the interest rate you will pay is 4%.

The lower rate applies for two to three years although other, longer term deals are available, and many have a 'stepped discount' where the discount decreases in two or three stages. Normally, the bigger the discount, the shorter the period for which it applies. The Bank of England is keeping interest rates stable at the moment which makes variable rate mortgage deals look a good option for many borrowers. This is because, unlike a fixed rate, variable rate mortgages vary with interest rates. So when the Bank cuts interest rates, your monthly payments should get smaller.

So, how are you going to get the discount mortgage which will be best suitable for you and your present circumstances? We suggest that even though the "Compare sites" on the Internet are a useful facility, and certainly a very time saving one, we should question just how they make their money, and to do this you must accept that if a mortgage lender is willing to pay a "finders fee" to a Compare website or any other entity for that matter, then it is you who will be paying for that in the long term through your mortgage.

Is that in your best interests? Finders fees can amount to quite a lot of money, your money incidentally, so you may have to resort to the old fashioned method which has been tried and tested for hundreds of years - have a walk down your high street and see if there is a discount mortgage on offer there!


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