Tracker Mortgages

Another variation on the variable rate theme, is the base rate tracker mortgage.

Up or Down!

You will make payments to your mortgage lender, based on the Bank of England Base Rate, or another index. Your mortgage payments go up or down in line with fluctuations in this rate.

The same, but different

This up and down variation is exactly what happens, of course, with a Standard Variable Rate mortgage. Where the tracker differs, is that your mortgage lender 'fixes' the interest rate that you will pay, usually a percentage point or fraction above the prevailing Base Rate, at the time you take out the mortgage. You know that you will pay the exact fixed amount above the Base Rate.

Collars are Common

A collar is a restriction on a tracker mortgage imposed by the lender, that limits reductions in the tracker rate to, say, 3%. In this scenario, suppose the base rate was 3.5%. If it fell to below 3%, you would not benefit from this reduction

Up-front charges and early repayment charges are common with tracker mortgages.

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If you prefer, you can take the opportunity right now whilst you are online, to enquire about a mortgage.

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