What is the difference between fixed, discounted, capped, and variable interest rate mortgages?
Variable interest rate mortgages. The interest rate on your mortgage will vary, unrestricted, up and down over the period of your loan dependant on the performance of the economy. Fixed interest rate mortgages. The lender will guarantee you a set rate of interest on your loan, normally for a specified number of years. Once this period has expired, your interest rate will revert to the normal variable interest rate. Capped interest rate mortgages. The lender will guarantee that your rate of interest will not rise above a set interest rate. However, if the normal interest rates fall, the rate of interest, the lender charges you, may also fall. Discounted interest rate mortgages. The lender can guarantee a discounted amount of anything, but normally up to five per cent, off your interest rate. This means the interest you pay will still vary up or down but at a lower rate than the general interest rate. Normally, this is for a set number of years. Once this period has expired, your mortgag
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