Remortgage - Discount on What?

AuntyJean

We took out a 0.25% Flexible Discount (discounted for 5 years, term 15 years), interest only mortgage against our current home as a way of borrowing some money in August 2001.

It was presumed that the 0.25% discount was against the bank base rate which at Aug 2001 was 5%.

However, the initial interest rate was 5.990% and the current interest rate we are paying is 6.04%. As the current base rate is 4.75% what is the 0.25% discounted on? Why when we asked if we could borrow some more were we offered a new deal at 5.7% (fixed for 2 years and to continue with the current term without extending it)

Sorry to be a complete ignoramous but we have never had a mortgage being lucky enough (or unlucky) to inherit our parents house.

I have a basic grasp of x% interest being different to APR but need someone to clarify what is what so we can choose the best deal.

Many thanks


Jean

Freddie_Snowbits

Just checked my mortgage, which is discounted to 5.19%. I think the idea of stretching the legs around the Building Society and Bank springs to mind to get the best deal.

My building society is offering 10 year fixed at 5.45%

Good luck and ditch the bank (Only if it is cost effective)