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Discount mortgages

Tell us about yourself and our broker partner Mojo will find the best discount mortgage rates for you...

Compare discount mortgage rates from 90+ lenders across the whole of market

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What is a discounted mortgage?

A discounted mortgage has a variable interest rate at a set percentage below the lender's standard variable rate (SVR). Usually discount deals last for two to five years, but sometimes longer. Because it's a variable rate, it will change whenever the SVR does, but the discount size remains constant.

Example: If your lender’s SVR is 5% and the mortgage discount is 2%, your initial rate will be 3%

If the SVR rose to 6% your discount would still be 2%, making your new rate 4%

If you would prefer more certainty when it comes to your mortgage repayments, a fixed-rate mortgage may be more suitable.

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How do discount mortgages work?

Most mortgage deals offer you a discounted rate for an initial period of between two and five years, although some can last for up to 10 years.

Discount mortgages are variable rate mortgages and you pay a fixed percentage less than the lender’s current SVR during the offer period. If the SVR rises or falls during that time, your rate of interest will change in line with that, but the percentage discount remains the same.

Tracker mortgages, are similar as they also rise and fall in line with a certain rate, although the vast majority of trackers follow the Bank of England base rate rather than your lender’s SVR. This means that it can be easier to determine when a rise in rates may be due, by following the economy and base rate movements.

How to compare discount mortgage rates

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How much can I save with a discount mortgage?

The savings you can make with a discounted mortgage rate depends on the size of mortgage you need, the discount you’re offered, and how long it applies for. 

When comparing deals, look at both the discounted interest rates and the SVRs they are linked to, as this is what you will pay unless you switch deals at the end of your offer period. 

It's also a good idea to compare them with fixed and tracker rate deals with other lenders. SVRs are typically higher than other mortgage rates, so a relatively small discount might not necessarily be the best deal on the market.

You also need to factor in any extra costs, such as the mortgage arrangement fee, when calculating how much a mortgage could save you.

What happens when your discount mortgage ends?

At the end of the discounted period, your interest rate reverts to the lender’s full SVR, so the rate you're currently paying, but without the discount element.

It's a good idea to start comparing remortgage deals a few months prior to the end of your discounted period to avoid this.

Remortgaging enables you to switch to a new mortgage provider who could offer you a new introductory rate. This could be another discounted rate, or you could try a tracker rate or fixed-rate mortgage deal instead.

You may also be able to transfer onto a new deal with your existing lender - known as a product transfer.

Advantages of discount mortgages

  • Can be cheaper than other rates due to the discount

  • As it's a variable rate, your mortgage repayments could reduce further, if the lender reduces their SVR

Disadvantages of discount mortgages

  • Your monthly payments can rise without warning, meaning your outgoings could change from one month to the next

  • There may be a cap on how much your payments fall - even if the SVR falls. This will minimise the amount you can save

Discount rate mortgages FAQs

Uswitch is not a mortgage intermediary and makes introductions to Mojo Mortgages to provide mortgage solutions. Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website. Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH. Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215) Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH, and head office is WeWork No. 1 Spinningfields, Quay Street, Manchester, M3 3JE. To contact Mojo by phone, please call 0333 123 0012.