Tracker Rate Mortgage

 

Tracker rate mortgages usually follow the Bank Of England base rate by a set amount.  It is normal for this amount to be added to the Bank Of England base rate.
For instance, the rate offered might be Bank Of England plus 0.75%.  As with fixed rates you can set a term for how long you want the tracker rate to last.

How Long Is The Tracker Rate?

Tracker rates can be between 1 year and for the life of the loan.

Are there Redemption Penalties Associated With Tracker Rates?

It is normal for the lender to stipulate a redemption penalty during the term of the tracker.  The redemption penalty can be anywhere between 1% and 5% of the loan amount.

What Happens To the Tracker At The End Of The Term?

Once your tracker rate comes to an end you normally revert to the lenders standard variable rate which is usually higher than the tracker rate you have left.

Can I Overpay My Mortgage If I have A tracker Rate?

Most lenders now offer an overpayment facility whereby you can overpay in to the mortgage during the term of the tracker rate without having to pay redemption penalties.  Overpayment limits vary from lender to lender.

What Are The Advantages To a Tracker Rate Mortgage?

Because the tracker rate follows the Bank Of England base rate, should the Bank Of England rate drop during the term of your tracker rate mortgage, your payments drop accordingly.

What Are The Disadvantages To A Tracker Rate Mortgage?

Bank Of England rates can go up as well as down.  If the rate goes up then so will your monthly mortgage payments.