Deferred Rate Mortgage

With a deferred rate mortgage the interest you repay on the mortgage is divided into two parts. One part you pay as you would normally and the other part is added to the remainder of the mortgage capital. This means you pay a lower than usual interest rate for a set period of time at the start of the mortgage term. The interest that you do not pay during this fixed period is added to the outstanding mortgage, or ‘deferred’.

The advantage of this is that you can save money by paying a lower monthly mortgage payment at the start of your mortgage term when you might be short of funds.

However, on the downside the interest that is deferred will cost you more to repay in the long run because it increases the mortgage capital meaning the interest charge will be larger after the deferred interest period ends.

Deferred rate mortgages are typically suited to young professionals with little money at the start of the mortgage, expecting a fairly considerable increase in their income during the mortgage term.

Other rates:

Capped
Deferred
Discount
Fixed
Standard variable
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