Cumberland Building Society has launched some great new mortgage deals for those who can afford higher loan to value mortgage bands. The lender is offering the very competitive 2.69% mortgage rate for those who can manage a 60% LTV or a slightly higher albeit still excellent 2.79% for those that can swing a 75% LTV. Both deals come with fees that total £495.
Cumberland also has a new five year discount deal set at 2.99% for those that can make 60% LTV without any fees. Of course, before you take a look at any of these discount mortgages it may be helpful to know a little more about what a discount mortgage is and how it can help you.
In short, a discount rate mortgage offers a standard reduction in the amount that a lender assigns based off of a SVR for a specified time period. This allows the lender to enjoy smaller monthly repayments during the period of time.
It is important to keep in mind however that it is not really the size of the discount that matters as much as the actual rate that you will be paying each month on the loan since this will determine how much you really save.
For instance, a low rate that lasts for five years will be better than a slightly lower rate that only lasts for two years since you will have more time to save. Some discounts and deals will even stretch to the ‘lifetime’ of the mortgage depending on how much of a deposit you can afford and what your credit rating looks like.
The main factor that differentiates a discount mortgage from a tracker mortgage is that it is based on the increase and decrease of a bank’s internally set standard variable rate instead of the rise and fall of the base rate that is set by the Bank of England.