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A discount mortgage applies a percentage discount off the lender’s variable rate. With a discount
mortgage, your monthly payments move up and down in accordance with the lender’s normal rate but
you’ll be paying at a reduced rate over the specified time period. Ideally, you’ll want to find
a discount mortgage that offers a one or two percent discount without a lock-in period, so you can remortgage
with another lender when the discount period comes to an end.
With a tracker mortgage, the difference between the Bank of England base rate and your mortgage rate is fixed.
For example, your mortgage might be set at 1% above the base rate, and as the base rate rises and falls,
your mortgage will track along with it. Tracker mortgage rates usually apply for the entire duration of your
mortgage, so in that respect they differ from fixed rate mortgages, discount mortgages, and any other special
rate deals which tend to only apply for the first few years.
