Discount mortgages

This all depends on how much your discount was and how much the lender’s SVR has changed over the course of the introductory offer period. 

Lenders are free to change their SVRs whenever they like, but - for competition reasons - they tend to move up and down in line with the Bank of England’s base rate. 

Irrespective of this, you will still pay more than you were paying on your discount rate once that deal ends.

Early repayment charges are penalties for going over the mortgage overpayment threshold and are usually between 1% and 5% of the amount you overpaid. The percentage tends to go down the further into the deal you get.

If, for example, you want to pay off a £100,000 mortgage in full within the discounted period, you could be asked to pay up to £5,000 in early repayment fees.

Most lenders will however allow you to overpay by a certain amount per year - say up to 10% of the total amount owed - without incurring early repayment charges.

Discount mortgages offer a lower rate of mortgage interest for a set period of time; cashback mortgages, which are designed to help cover costs associated with the home-buying process, give you cash upfront once your mortgage application has been finalised. 

Cashback can be a feature of a discount mortgage, just as it can be offered with a fixed-rate or tracker deal. However, while cashback deals can look impressive at first, they often come at the cost of a less impressive discount on the interest rate, so you need to weigh up what is more important to you: short-term or long-term benefits.

If you want to cut down the time it takes to pay off your mortgage, you can make overpayments – where you pay more than your contracted monthly fee. 

Doing this can save you thousands of pounds in interest. 

But while most mortgage lenders allow you to overpay by a certain amount - say up to 10% of the mortgage value - penalty-free, making larger mortgage overpayments during your initial deal period could result in early repayment fees (see above).