What is the difference between flat rate and reduced rate?

Flat interest rate and discount rate are two methods for calculating mortgage interest rates. 

If the interest rate to be paid remains the same for the duration of the loan, the uniform interest rate applies because it always offsets the original loan amount (principle). 

When the amount of interest payable takes into account the amount that has been repaid, that is, it is calculated based on the remaining loan amount or outstanding balance instead of the original principal amount, and there is a reduced interest rate. 

Sometimes, the flat rate may be advertised at a lower and more attractive rate than the corresponding reduced rate. When applying for a mortgage, be sure to check with your bank or your mortgage broker whether a flat interest rate or a lower interest rate applies.

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