Discount mortgages ‘currently best value’
Variable-rate discount mortgages are currently cheaper than short-term fixed-rate deals, according to a new report.
Research carried out by online mortgage company mform found that although two-year fixed-rate deals have the best headline rates on the market, their total cost once fees are taken into consideration make them more expensive than discount mortgages.
The company compared the average cost of the best ten two-year fixes and the ten most competitive discount products available and found the latter are an average of £138 a year cheaper.
Francis Ghiloni, mform's marketing and business development director, said that borrowers planning to remortgage who do not need the payment certainty provided by a fixed-rate should give serious consideration to a discount deal.
"Based on true cost discount rates are already better value for borrowers but if, as expected, rates do drop next year they will become even better value," Mr Ghiloni explained.
The advice differs from that recently given by Drew Wotherspoon of mortgage broker John Charcol, who said the likelihood of a base rate cut in the near future made trackers the "clear product of choice at the moment".
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