The lender agrees to give a fixed discount off the normal variable rate for a guaranteed period of time. This period may last a few months or several years. The discounted rate will move up and down with the normal variable rate but the payment rate will retain the agreed differential below the variable rate for the agreed period of time. If a discounted rate is taken the lender will normally impose early redemption penalties if the mortgage is repaid within the first few years (see Redemption Penalties).
A reduced mortgage interest rate which is subtracted from the Standard Variable rate.
A lower or "teaser" rate on a variable rate or adjustable rate mortgage for an early period inthe life of the loan. After this period is over the rate may rise.