Initially the lender reduces the interest rate applied to a loan, compared with that lender’s SVR. This rate is variable which means the amount you pay each month can change if the lender changes their SVR, which they’re free to do as they like. At the end of the discount period the interest charged typically reverts to that lender’s SVR. Initially attractive payments will rise when the discount period ends.
There are many different styles of interest applied to mortgages and this can be more complex when one considers that interest may be chargeable to mortgage account either on a daily, monthly or less commonly now, annual period. This can have major implications when considering additional payments to reduce the term of a mortgage.
A parting thought…
Whatever your borrowing requirement it is usually advisable to ensure the payments can be met, even if the borrower’s health or income are interrupted through accident or ill health, or even death.
- How will you meet your long term loan commitments if your income is interrupted,
either by illness or death?
- Ask us about solutions – before you need to rely on them…
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOUR DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.