Discount rate mortgages

While this mortgage is a variable rate -fluctuating according to the lender's SVR - you benefit from a discount for a set period, usually a few years.

Pros:

• Makes the first few years of mortgage repayments easier - useful if you need cash initially to cover other costs, or if you anticipate a higher income by the end of the set period

Cons:

• Will usually incur penalties if you change mortgage during or after the discounted period
• If interest rates rise, your repayments will follow suit