With a discount rate mortgage, you gain guaranteed reduction from the lender's variable base rate for a fixed
term.
The actual period of the discount will vary from scheme to scheme and can range from a few months to a discount for the life of the mortgage.
Discounts will ensure lower payable rates than the lender's
mortgage base rate and therefore lower payments when interest rates
fall.
Of course if interest rates rise then payments will increase although they will still be lower than the ordinary rate. Generally speaking discounts give no protection against rising rates, although sometimes lenders may combine a discounted mortgage with a capped level above which your payments cannot rise.
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