This is a type of Standard Variable Rate mortgage. If your lender's SVR is 7%, they may offer you a discounted rate of interest of, for example, 1.5% less than the SVR for an agreed period of time, meaning that you will be paying 5.5% interest. No matter what happens with interest rates during this set period, you own rate of interest will remain at 1.5% below your lenders SVR.
At the end of the discount period your lender's SVR becomes payable. As with all mortgage offers, check the terms and conditions carefully to see what kind for early redemption penalties are chargeable if you wanted to repay the loan early or switch to a different lender for a better rate.
