Tracker Mortgages
A tracker mortgage reflects the Bank Of England's base rate, by tracking the base rate any input from the lender is removed so you'll see instant results as the base rate changes. If your budget is reasonably flexible following the base rate can produce some great results.
Today's Best Tracker Mortgage Deals
Tracker  |
Tracker | 1.98% Until 31/01/11 | 3.0% | 60% | £999 |  |
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Tracker | 2.69% Until 01/11/11 | 4.5% | 70% | £595 | |
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Tracker | 2.79% For 3 Years | 4.0% | 70% | £995 | |
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Tracker | 3.09% For 3 Years | 4.1% | 75% | £995 | |
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Tracker | 2.79% For Term | 2.9% | 70% | £999 | |
About Tracker Mortgages
A tracker is the most transparent mortgage product on the market, unlike a discount mortgage which discounts the lenders SVR, a tracker mortgage will follow or track the Bank Of England's base rate, meaning you're guaranteed to get the most accurate interest rate for the term of the tracker. For example if your tracker deal is set at +1.5% and the Bank Of England's base rate is 4.5%, your mortgage interest rate would be 6%. Another benefit is that a tracker will instantly adjust as the base rate changes where mortgages based on the lenders SVR can be sluggish to fall, quick to rise mind you!
The Length Of The Tracker
Tracker mortgages are usually offered over 2 to 5 years but it's not uncommon to see lenders offering complete term trackers (usually 25 years), the shorter term trackers benefit from slightly more competitve rates but suffer from early repayment charges as lenders attempt to tie you in, where as longer term trackers tend to have slightly higher rates but don't have ERC applied, because the idea is that you want need to remortgage, removing a lot of hassle and cost invloved with remortgaging. That said if your situation changes having no ERC makes remortgaging possible.
What To Look Out For
A tracker mortgage does offer much in the way of sercurity, it's a form of a variable rate mortgage and consequently carries the risk that interest rates can rise aswell as fall, making it particularly risky in uncertain times. It's also a difficult mortgage to budget for, managing a repayment that could change by hundreds of pounds each month is not easy and should be considered at length if you're on a tight budget. Lenders will try and recoup some of their profits by applying high high early settlement charges and rate collars, which are restrictions some lenders apply to limit how low the interest rate can go.
The bottom line is that base rate tracker mortgages present a risk to the borrower. If you feel that the risk is worth it in light of the potential savings, then this is a good mortgage choice for you. However, if you prefer certainty with your mortgage, you will probably be more comfortable with a fixed rate mortgage.
