How Does It Work?
Your monthly payments can go up or down, but you get a discount on the lender’s standard variable rate for a set period of time. At the end of the deal, you usually change over to the full standard variable rate.
Early Repayment Charges?
During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.
What does it mean for you?
- It gives you a gentler start to your mortgage, at a time when money may well be tight. But you must be confident you can afford the payments when the discount ends.
- The discount period is limited, so budget for higher repayments.
- You may not be able to make overpayments and pay off the loan early without penalties.
- If the lender decides to increase the rate your monthly payments will increase.
- If the Bank of England rate goes up, your lender may decide to increase your rate. They will choose when and how much to increase your rate.