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Discounted Rate Mortgage
A discounted rate mortgage offers you reduced repayments for a given term
and the lender gives a discount off a variable rate. The variable rate may be
5% and with a discount of 1% this will make your initial interest repayment rate
4%. If the variable rate on which your discount rate is based falls, your repayments
will fall. If the lender’s standard variable rate rises so will your repayments.
Whilst a discounted rate mortgage may be helpful initially, you should consider
how much your repayments will be when the discounted period ends.
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