Discount mortgages

These allow you to get a discount off your lender's standard variable for however long the discount lasts.

For example, you might be offered a one percentage point discount off the rate for two or three years.

With a discounted rate, you know that if your lender's standard variable mortgage rate rises or falls, your repayments will echo those moves - minus the discount off the rate you're getting.

Like a fixed rate mortgage, if you want to get out of the loan during the special offer period then you will be charged a penalty. However, discount deals often don't have arrangement charges.

Discounted deals are less popular these days than they were, mainly because they've largely been superseded by tracker deals.

If you have a tracker mortgage, you know your interest rate has to move in line with base rate. With a discount mortgage, you know you'll pay a discount off the SVR but you have no promise that the SVR will move up or down with the base rate.

With discounted deals, you do need to check what the underlying SVR is. Some lenders have much higher SVRs than others, and there's no point in getting a discount off a rate that will still be too high.