Discount mortgages

getmore4less

A good example of what lenders can do is Nationwide and a few others.

At one point they had follow on rates that were base rate trackers some very good but for this example Nationwide had base+2%. which became know as the BMR

Once they realised this trapped them to that rate and tracking base rate they changed so anyone getting a new loan/deal since 2009 has a followon rate of SMR, currently 3.99% and no guarantees.

The key is to be aware that any lender that has followon rates higher than the norm could have you in mortgage trap if your ability to switch lenders is comprimised.

Nebulous2

pledgeX wrote: »

But if that financial crisis happened during the 3 year term I would have to pay an ERC to exit the deal (~2.5k).

That's the risk you take then. You need to weigh up the risk/reward for yourself.

I assume you see some advantage over a fixed rate, so you need to decide if the additional risk is worth the saving you make. Does the discounted rate have a lower ERC?