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What we cover
With a tracker mortgage, your mortgage interest rate will be linked to the Bank of England base rate (BOE Base). This has historically been 1% to 2% below lenders’ own Standard Variable Rate. Since the credit crunch the margins have increased generally to between 3% to 4% above Bank of England base. The rate that you pay will normally be at a fixed amount above BOE base.
Comparing with discount mortgage deals, the major difference will be in the timing of interest rate changes. A tracker mortgage must change when BOE base changes (or at a fixed time after a BOE base rate change), whereas a lender can choose the timing of any change on a discount deal.
A tracker ensures that you benefit quickly from any reductions in rate. When rates are rising, however, you could find that the increase is applied more quickly when compared to a discount deal.
Since the credit crunch mortgage lenders have been slow to reduce their standard variable rates. Nothing is certain, but when interest rates are on the rise, we believe that tracker mortgage rates are likely to increase more quickly than discount mortgage rates.
A tracker mortgage is likely to give you savings over a period of time compared to lenders’ standard variable rates, but you should be aware that the rate is variable, and therefore your mortgage payments may rise and fall
When comparing deals, don’t forget the costs and hidden pitfalls. Read our lenders’ costs document for more information.
As independent mortgage advisors we’re well placed to find the cheapest mortgage rates that fit your individual needs.
To get on with finding the best mortgage deals for you, just contact us to discuss your needs.
Your home may be repossessed if you do not keep up repayments on your mortgage
Our typical mortgage advice fee is 0.5% of the amount borrowed. This depends on individual circumstances