Tracker Mortgages

What Is A Tracker Mortgage?

A tracker mortgage is a similar in some respects to the mortgage options such as discounted mortgages that track the mortgage lenders standard variable rate (SVR). With a tracker mortgage the Bank Of England base rate is the rate that is used to determine your mortgage repayments. For example your tracker mortgage may be set at 1% above the Bank of England base rate, so when the base rate changes so will your mortgage repayments.

What Benefits Do Tracker Mortgages Offer?

The biggest benefit of a tracker mortgage is that should the Bank of England cut their base rat then your mortgage payments will reduce straight away without having to wait for the mortgage lender to cut their SVR. Remember however that your tracker mortgage works the same way if the Bank of England base rate goes up.

Are There Any Pitfalls To Tracker Rate Mortgages?

Remember as with with fixed rate mortgages, there are tie in periods which can be costly to buy yourself out of. The tie in periods can be extended, so you may find yourself tied to the lender for a period of time after your tracker mortgage is complete.

Also always check your mortgage documents thoroughly to ensure that you know how quickly you will see the effects of any Bank of England base rate changes in your mortgage.

If you are in any doubt about your mortgage it is always best to consult with an independent financial advisor before committing to the mortgage.