Confused about the initial interest rate

seabass

When looking at quotes for mortgages, a lot of them say for example:-

Initial interest rate 2.99% and then 3.99%

Can someone explain what it means, will I be paying the 2.99 for the term of the mortgage for 2 years, then it will move to 3.99?

Yorkie1

I'm assuming you're looking at products that will be fixed or trackers for a certain time? E.g. a 25 year mortgage, with a fix for the first 2 years?

If so, then the 'initial' 2.99% rate is either the fixed interest rate for the set period, or the % margin over base rate (however expressed) for the set period. At the end of the set period, you revert to the lender's standard variable rate for the rest of the 25 years, which at present is the 3.99%. That will vary and therefore you'd need to check what the SVR is when you approach the end of the set period.