What are Discounted Standard Variable Rate Mortgages?
In simple terms a Discounted Standard Variable Rate (SVR) mortgage is a type of variable rate mortgage. A variable rate mortgage is a mortgage where the interest rate goes up and down according to a mortgage providers Standard Variable Rate. This is opposite to a fixed rate
mortgage, where the rate is the same throughout a set period.
Applying for a Discounted SVR mortgage
When you've found the right Discounted SVR mortgage from our range, follow these steps to start your mortgage application:
Check how much you could potentially borrow.
Before beginning an application, it’s important to check that how much you could borrow for a mortgage and what the cost could be we have a borrowing calculator
and a repayment calculator
to help you decide.
Obtain a lending decision (or ‘Approval in Principle’).
Our online Approval in Principle application
takes just 10 minutes to complete, after which we’ll be able to tell you whether or not we would be able to lend to you and how much we would be able to lend.
Our Discounted SVR mortgage deals have their interest rate set at a specified ‘discount’ level below our Standard Variable Rate (currently 4.74%) for a specific initial deal period (typically 2 years).
If we offer a discount of 3% on a mortgage deal for 2 years, you would pay a rate of 1.74% (4.74% SVR – 3% discount)
If the SVR rose to 4.99%, the interest rate payable would increase to 1.99% (the new SVR of 4.99% - 3% discount)
If the SVR reduced to 4.49%, the interest rate payable would fall to 1.49% (4.49% SVR - 3% discount)
Are they right for me?
If you believe that interest rates could fall further than their current level, a Discounted SVR mortgage could be right for you. This would provide you with a lower interest rate and lower monthly repayments.
However, if the SVR rate increases you would have a higher interest rate and your monthly repayments would increase.
Depending on your Loan to Value and the amount you need to borrow for your mortgage, a Discounted SVR may provide one of the lowest rate of interest compared to the other mortgage deals that are available to you.
Our Discounted SVR mortgage deals typically have lower Early Repayment Charges compared to our fixed rate products so if you think you might be in a position in the future to pay off some or all of your mortgage early, a Discounted SVR deal may be preferable to another type of mortgage.
Things to consider
Our Standard Variable Rate can be increased or decreased at any time, which would affect the interest rate on your mortgage and either increase or decrease your monthly mortgage repayments.
The SVR is set by the Society and is independent to the Bank of England Base Rate. Any change in SVR may not necessarily be linked to changes in the Bank of England Base Rate.
You are required to pay an Early Repayment Charges during the discount period, should you wish to switch mortgage deals or pay off your mortgage early.
Our Discounted SVR products typically have an interest rate collar. This is the lowest that your interest rate would fall to should there be a reduction in SVR. Please check the product details for the exact interest rate of the collar.
Alternatives to tracker mortgages
Fix your mortgage interest rate, so it won’t change over a set period of time, regardless of what is happening to interest rates elsewhere.