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Scour the market and compare discounted variable-rate mortgages
Your mortgage is likely to be your biggest financial commitment, so shopping around for the best deal is vital. We can help by comparing thousands of products from a wide variety of lenders, covering the whole of the market. This way, you can be confident you’re getting the right deal.
What is a discounted mortgage?
Mortgage lenders have a standard variable interest rate, which is based on the Bank of England’s base rate and their own costs.
If you have a discounted variable-rate mortgage, your interest rate will then be set at a fixed percentage below the standard variable rate (SVR). Bear in mind, though, that the amount you pay each month could change.
What’s more, your home may be repossessed if you do not keep up repayments on your mortgage.
How do discounted variable-rate mortgages work?
Let’s say, for instance, that the mortgage provider’s standard variable rate is 4.99%. If the deal’s discounted variable rate is set at 1% below it, your interest rate would be 3.99%.
The standard variable rate (SVR) can alter, though, which means that the amount of interest you pay on your mortgage repayments could also change. But the interest you pay will always be charged at the agreed, fixed percentage below the SVR.
So, if the lender’s SVR changed to 5.99% and your agreed discount was 1%, you’d be charged interest at 4.99% on your mortgage repayments. This will be the case for however long the SVR is set at 5.99%.
In this scenario, as your interest rate increases, your monthly mortgage instalments will go up accordingly. But this ‘only’ means that you would end up paying more interest, rather than paying back more of the money that you’ve borrowed.
How long does a discounted variable-rate mortgage last?
Discounted variable-rate mortgage deals usually last between two to five years. How long your deal lasts will be based on the current deals mortgage providers are offering. It will also depend on your financial situation and credit history.
Once the deal ends, you’ll be moved to the mortgage provider’s standard variable rate, which is likely to be higher. This is when you can look to take out a new discounted variable deal or fix yourself with a different low-rate deal, either with the existing lender or a different company.
Advantages of a discounted variable mortgage
A discounted variable mortgage offers advantages, such as:
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A lower interest rate than the mortgage provider’s standard variable rate for the duration of your deal
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The possibility of paying even lower interest rates if your provider’s standard variable rate is lowered because of changes to the Bank of England’s base rate
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Lower early repayment charges compared to fixed-rate mortgage deals. This can help to keep charges to a minimum if you decide to pay more than your monthly repayments
Disadvantages of a discounted variable mortgage
Discounted variable mortgages may come with a few disadvantages too.
For instance, your mortgage provider’s standard variable rate could increase during the mortgage deal. This means that, even though your mortgage rates will still be lower than the standard variable rate, they may go up. In the long term, a similar situation can make it difficult to budget for payments if you don’t know how much they’re going to cost.
It can be a good idea to speak to a mortgage advisor before taking out a discounted variable-rate mortgage to discuss your options. This way, you can make sure this is the right mortgage type for you.
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Comparing discounted variable-rate mortgages
Comparing discounted variable-rate mortgage quotes can help you find the best mortgage deal for you. By using MoneySuperMarket’s mortgage comparison tool, you can compare discounted variable-rate mortgage deals with other mortgage types to get more of an idea of which deal is right for you.
Select what type of mortgage you’re looking for from remortgage, house purchase, first-time buyer, or buy-to-let. Then, compare mortgage quotes. You can also filter the results by mortgage type to just see discounted variable-mortgage deals.
You’ll be able to compare quotes by the duration of the deal, the initial monthly mortgage costs you’ll repay during the discounted period, and the maximum loan-to-value (LTV) the provider is willing to lend you. Each quote will also show you an example of the SVR you’d then be moved onto at the end of the deal. So, if your payments are likely to increase dramatically, it’s a good idea to think about whether you’d need to switch to a new deal once you’re on the standard variable rate.
Will a quote help understand whether a discounted mortgage is the right option for me?
Mortgage quotes are there to help you get a better idea of whether or not a discounted variable-rate mortgage would be right for your borrowing needs. That said, you’ll still need to get an agreement in principle, and then a firm mortgage offer if you qualify, to take out a discounted variable-rate mortgage.
An agreement in principle and official mortgage offer will also take into account your financial situation and credit history. This can affect the discounted mortgage terms you’re offered, as well as whether or not you’re offered a deal.
What is the difference between a discounted and tracker mortgage?
What is a discounted mortgage? And a tracker mortgage? It’s fair to say that they are both very similar. However, the main difference between the two is that a discounted variable-rate mortgage tracks your lender’s standard variable rate, whereas tracker mortgages follow the Bank of England base rate.
When it comes to choosing the option that best suits your need, you’ll need to decide whether you’re prepared to face a possible, ‘unpredictable’ increase in interest rates. If you opt for a discounted mortgage, rates will go up in return for the savings offered.
Instead, if you go for a tracker mortgage, you may end up paying a bit more. But, with this mortgage type, you’ll find it easier to forecast if and when the Bank of England base rate will change.
Can I take out a discounted mortgage when remortgaging?
Yes, you can. If you’re looking to remortgage, discounted variable-rate mortgages could be a valuable option.
But before you start the remortgaging process, it’s always wise to understand whether this is the right move for you. Make sure to check for costs, fees, and early repayment charges on your existing deal to see if remortgaging is a convenient solution.
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Reviewed on 17 Dec 2025