Tracker mortgages, are an alternative to fixed-rate mortgages, and work in a slightly different way. Tracker interest rates are linked to the Bank of England rate or some other 'base rate' which means they will always go up or down in line with changes to the base rate. The interest rate applied to a tracker mortgage is set to cost a percentage, or fraction of a percentage, more or less than the 'base rate' it is linked to. For instance, if the tracker mortgage is linked to the Bank of England base rate and is set at + 1%, then assuming the Bank of England base rate is 5%, the tracker interest rate you will pay is 5% + 1% = 6%.
Tracker mortgages are so called because they 'track' changes in the base rate they are linked to. Therefore, if the base rate climbs by 1 per cent, the pay rate also increases by 1 per cent. Similarly, in a climate of falling interest rates, borrowers can enjoy reduced mortgage repayments.
A number of different rate tracker mortgages are available, including 2 year, 5 year and 10 year tracker mortgages and even mortgages that track a rate for the life of your loan. The application fees, product and valuation fees, and flexibility of the loan will depend on the lender and your circumstances.
At Professional Mortgage Services we will review your requirements to establish which lender is offering the best product based upon your individual needs.