A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
If you need help deciding if a tracker mortgage is for you or if you want to know the difference between an SVR and a tracker mortgage, we can help. Our team of professionals is experienced and friendly and provides a personalised mortgage advice service to every client!
We are a highly recommended financial adviser and mortgage broker known for excellent reviews and impressive endorsements. Our mortgage broker team is based in Bromley and Beckenham and helps clients across London. As part of our mortgage advisory service, we can help individuals and families source and assess tracker mortgages from the whole of the mortgage market.
WHAT IS A TRACKER MORTGAGE?
A tracker mortgage is a type of mortgage that is directly tied to the base rate set by the Bank of England. So, you could pay more or less if the base rate changes. For example, a tracker mortgage will have an interest rate that will be the base rate plus a fixed interest percentage determined by the lender. The lender sets the interest rate, which usually remains fixed for the whole repayment period, while the base rate can change depending on what the Bank of England decides.
Sound confusing? Don’t worry. Our mortgage advisers will explain and analyse different mortgage types to recommend the most advantageous mortgage for your situation. We’ll search the whole of the market to find you the best mortgage type and deal.
THE DIFFERENCE BETWEEN AN SVR MORTGAGE AND A TRACKER MORTGAGE
You might notice some similarities between a Standard Variable Rate (SVR) mortgage and a tracker mortgage. Depending on the Bank of England's base rate, people with an SVR mortgage can also pay more or less.
The big difference is that the base rate influences an SVR mortgage, but the mortgage lender has the final say without being allowed to charge more than the base rate. On the other hand, your tracker mortgage lender must increase and decrease the interest rate depending on the base rate.
TYPES OF TRACKER MORTGAGES
- Lifetime tracker mortgages: These have a variable interest rate that tracks the Bank of England's base rate for the life of the mortgage
- Discounted tracker mortgages: These have a variable interest rate that tracks the Bank of England's base rate, but with a discount applied for a certain period
- Capped tracker mortgages: These have a variable interest rate that tracks the Bank of England's base rate, but with a cap on the maximum interest rate payable
THE RISKS OF TRACKER MORTGAGES
- The interest rates on a tracker mortgage can be unpredictable, which could make budgeting difficult
- Borrowers could end up paying more if interest rates rise
- Some tracker mortgages have a short-term discounted rate, which can mean higher monthly payments once the discount period ends
TRACKER MORTGAGE FAQS
What are rate collars and caps?
Collars and caps are financial terms used to describe the minimum and maximum interest rate a lender charges.
What is the base rate?
The base rate is the rate of interest the Bank of England charges banks to borrow money from them. If a bank is paying interest to the Bank of England to borrow money, they pass on this interest to their own customers, taking out mortgages.
What is LIBOR based?
The London Interbank Offer Rate (LIBOR) sets short-term interest rates. It indicates the average interest rate one bank should be paying to another bank.
WHY USE AN ADVISER TO FIND THE RIGHT TRACKER MORTGAGE?
A tracker mortgage is influenced by outside factors, i.e., the Bank of England’s base rate. Therefore, it can be challenging to understand when a tracker mortgage is right for you. Industry expert mortgage advisers, like our mortgage brokers, can assess your situation to explain whether a tracker mortgage is right for you. If a tracker mortgage is your best option, we can search the market for suitable deals, saving you time, stress and possibly money.
CONTACT US FOR MORTGAGE ADVICE
Are you searching for a mortgage to purchase a property in London or elsewhere in the UK? Our team of trusted mortgage advisers has extensive experience in searching for the best tracker mortgages in the UK, and we can help you find the right solution to meet your unique needs.
So why hesitate? Our teams are based in Bromley and Beckenham and work with clients across London and the UK. Get in touch today.
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