What is a Tracker Mortgage?
A tracker mortgage is a type of variable rate mortgage. The interest rate will normally track the Bank of England base rate, or the lender's own base rate, at a set margin (for example, 1%) above or below it.
Tracker mortgage deals can last for as little as one year, or as long as the total life of the loan, commonly known as lifetime trackers.
Once your tracker deal comes to an end, you're likely to be automatically transferred onto your lender's standard variable rate (SVR) and this is typically a higher rate of interest.
Tracker mortgage benefits
Borrowers can sometimes secure tracker mortgage deals with very low rates of interest, and a benefit of this is normally seen when the base rate reduces. This normally means your mortgage payments will reduce too.
A good idea while your tracker mortgage rate is low, is to take the opportunity to overpay on your mortgage. This will help reduce the overall capital faster and shorten the total length of time it take you to pay off your mortgage. This in turn will cut the amount of interest you pay on the mortgage overall.
Providing you have a traditional tracker linked to the Bank of England base rate, your rate is not dependent on the whim of your lender, it is only affected by changes in the Bank of England base rate.
Why use a Broker for Tracker Mortgages?
It is essential to speak to someone who can advise you on the most appropriate solution to suit your individual needs, as a tracker rate mortgage may not be suitable for everyone, especially if you are looking for stability in your mortgage payments.
Our mortgage brokers at JF Financial Associates have years of experience behind them, so there is no one in a better position to provide you with the impartial advice. Call us on 0845 508 8588 and let us help you find the most appropriate mortgage to suit you!