A tracker mortgage is a type of variable rate mortgage. The interest rate tracks the Bank of England 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.
Once your tracker deal comes to an end, you’re likely to be automatically transferred on your lender’s standard variable rate (SVR). Typically, this will have a higher rate of interest.
- Because the interest rate that you pay on the mortgage ‘tracks’ the Bank of England’s base rate, the interest rate you pay will rise or fall in line with this so you will benefit from falling and low interest rates which will lower your monthly payments.
- It may make budgeting more difficult as interest rates can rise as well as fall, and unlike a fixed rate mortgage you won’t know for certain what you will be paying each month. For example, one month your interest rate could be base rate at 0.5% plus 2.5%, giving you a total of 3%; the next month, the base rate could rise to 1%, giving you a total of 3.5%
Your independent FAC mortgage broker can help you to consider all the pros and cons of a tracker mortgage so you can decide if it’s right for you.
For truly unbiased independent financial advice feel free to call us in confidence on 01726 814935
We charge a fee for mortgage advice. Our typical fee is £500
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER LOAN SECURED ON IT.