A Discount Mortgage allows people to make their repayments with an interest rate that is less than the standard variable rate (SVR) determined by the lender.
For example, when a lender’s SVR is 5% with a 2% discount, the interest paid is 3%. This reduced interest rate is usually available for a period of two or three years but mortgage customers may be eligible to apply for longer deals.
Usually, larger interest deductions will run for a shorter length of time during a Discount Mortgage. After this expires, the borrower will pay the lender’s SVR.