In today’s competitive environment, many providers offer an initial discounted rate to new customers (sometimes this is restricted to first time buyers).
The discount is a limited period reduction in the normal variable rate e.g. 2.0% for a year, or maybe 3% for six months. The bigger the discount the shorter the term is a general rule of thumb.
Occasionally much higher discounts are available as special offers, a good Broker will be able to show you where the best rates are.
At the end of the discount period the rate reverts to the Standard Variable Rate (SVR).
Be careful of rates that look good, such as 4% discounts. But 4% off what? You need to look at what the lenders normal long term or SVR is. As the 4% discount isn't much use if the lenders SVR is 2% higher than everybody else's. Also check out the redemption penalties and any arrangement fees they may wish to add to the loan.
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