are discount mortgages usually lower than a fixed rate?

Jimster_s_2

ive got a quote from a broker and the discount option is exactly the same as the fixed rate. i would have thought that the discount rate should be lower than the fixed rate hence the name of it.

they are both set at 5.19% (0.69% above base rate)

i understand the way they work and its a gamble with the discount but after reading through this site about the pros and cons i assumed that the discount would be less than the fixed.

lisyloo

Normally I would agree with you.
There is a premium to pay for the security of knowing what you payments are.

However at the moment we are in a period of
a) falling interest rates
b) a lot of competitiveness amongst lenders

Because of this, fixed rates are lower than they would "typically" be.

If you are inclined towards a fixed rate then I would say that now is as good a time as any but rates could drop so if you don't need the security then a variable may well end up being cheaper.

It a gamble.

KTF

The discount is normally agains the lenders SVR or the BoE Rate. What is the amount of the mortgage, term, etc as 5.19% fixed seems high for both a fixed and discount of you look at the range available on moneyfacts.co.uk for example.

Jimster_s_2

thanks for the replies
the value of the house is between 80000-85000 and im looking to take a mortgage of 64000

the fees i have to pay for are everything, i cant remember what they are without looking at home but its aroung £800 or slightly higher i think

i dont need the security of a fixed mortgage at all, but with the discount being the same as the fixed i assume that means they think the rates will fall again, otherwise i would assume the fixed rates would be higher

im only looking to fix myself in for 2 years at the most anyway because i might sell it, or find myself another deal. so i might be better off with a discount/tracker because i dont need the security of a fixed mortgage, especially if i might be paying over the odds for 2 years

herbiesjp

This is for a BTL as per your other post?

There are some cheaper rates available, but you need to see if the property and rental income allow you to go on those particular schemes.

What kind of property is it?

What rental income would it give you?

Jimster_s_2

its a mid terraced. i already own the property as a residential mortgage but need to transfer to btl. my mortgage is for 54k but i owe slightly less. the property is worth about 80000 - 85000 and im looking to take about 64k btl mortgage out on it. the rent will be 380 per month and i want interest only.