What is a tracker mortgage?
When rates are low, a tracker mortgage can in fact make a world of difference. Such a difference to your mortgage repayments can save you hundreds of pounds every month!
So what exactly is a tracker mortgage? A tracker mortgage is a variable rate loan that moves up and down, generally following the rates of the Bank of England. However they are often set higher than the Bank of England and lower than the standard lender variable rates.
The above information in turn means that savings can most certainly be made on a Tracker Mortgage when rates are low. These savings can mean a huge difference to your monthly repayments; often meaning some can pay it off early!
Tracker Mortgages are also said to be a lot more flexible than most mortgages and some lenders will not only give clients a discount, they will also allow those that lend from them to take payment breaks during the loan.
There are however some things to take note of prior to investing in a Tracker Mortgage. These include finding out what rate the mortgage is tracking.
Those that wish to invest in a Tracker Mortgage should make sure they check up on the lender’s standard rate. If this rate increases the repayments also increase!
Set-up fees and early redemption fees may also apply, it is therefore important to know exactly what fees are involved prior to setting up the Tracker Mortgage.
This is therefore a mortgage that will be very suited to some, how ever not so suitable to others. They are quite a risky option in some lender’s eyes, the rate of repayment falls if the base rate does, however the interest rate will also rise if the base rate is to climb at all!
