It is a mortgage with a variable interest rate that is a set amount below the lender's standard variable rate (SVR).

The interest rate on your mortgage will rise and fall by the same amount as changes to the lender's SVR.

The interest rate is usually lower than the SVR by one or two percent, and this amount is called the discount.

For example, if your mortgage offers a 1.5% discount and the SVR is currently 5%, your interest rate will be 3.5%.

  • If your lender's SVR goes up to 6%, your new interest rate will be 4.5% and your repayments will increase.

  • If your lender's SVR goes down to 4%, your new interest rate will be 2.5% and your repayments will reduce.

What is the SVR?

Each mortgage lender has a standard variable rate, which is the interest rate they give you once an introductory deal ends.

They can change their SVR whenever they want to, and it will often move up or down when the Bank of England base rate changes.

How long do discounts last?

Your discounted interest rate only lasts for a set period of time, usually one, two or three years.

Some discount rates last longer, and a few lifetime discounts are guaranteed for up to 25 years.

There is usually a fee for switching mortgage deals during the discount term. After the term ends, you will usually be put on the lender's SVR or you can move to a new mortgage deal.

What other types of interest rate can you get?

  • Fixed rates offer an interest rate that will not change during its initial term

  • Tracker rates offer an interest rate for a set time that will go up or down whenever a financial indicator like the Bank of England base rate changes

  • Variable rates can change whenever the lender decides to put them up or down

  • Capped rates can be variable, discount or tracker mortgages, and they come with a guarantee that the interest will not rise above a certain rate

Choose the right mortgage

Our comparison above includes every discount rate mortgage available in the UK.

As well as finding a deal with a low initial interest rate, make sure you could still afford your repayments if they increase because discount interest rates can go up at any time.

If you prefer the security of paying the same amount every month, consider a fixed rate mortgage instead.

Read our guide to help you choose the best mortgage before you decide.

Discount rate mortgages FAQs


What happens when the discount ends?


You will automatically be moved to the lender's standard variable rate, which is likely to be higher, meaning you will pay more each month.


How low can my rate fall?


Most discount mortgages give a minimum rate in the terms and conditions. Your interest rate cannot go below this "floor" rate, even if the SVR falls again.


Can I pay off my mortgage before the term ends?


Yes, but many lenders charge you for this. Discount mortgages usually charge you if you repay or switch them before the discount period ends.


Will applying for a mortgage affect my credit rating?


Yes, every application for credit you make appears on your credit record, so avoid applying for too many. Here is how your credit history works.


Can first time buyers get a discount mortgage?


Yes, some discount mortgages are available if you are buying your first ever home.

About our mortgage comparison


Who do we include in this comparison?


We include mortgages from every lender in the UK. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.


How do we make money from our comparison?


We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.