Glossary · UK
What is Discounted Variable Rate?
A mortgage deal offering a set discount off the lender's standard variable rate for an introductory period.
Full Definition
A discounted variable rate is a type of mortgage where you pay a fixed margin below the lender's standard variable rate (SVR) for an introductory period, often two to five years. For example, if the SVR is 7% and the discount is 1.5%, you pay 5.5%. Because it tracks the SVR rather than the Bank of England base rate, your payments move whenever the lender changes its SVR, so the rate is not guaranteed and can rise or fall at the lender's discretion. Discounted deals can start cheaper than fixed rates but carry uncertainty, and many include early repayment charges during the discount period. When the period ends you typically revert to the full SVR, which is usually higher, so borrowers often remortgage. Compare the discounted rate, the underlying SVR, fees and the APRC across deals, and stress-test affordability against possible rate increases before committing.