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Tracker Rate Mortgage
Tracker mortgages have become very popular with the mortgage buying public, as they are easy to understand and are totally transparent in the manner in which they are calculated, and present in nearly all cases good value for money.
A tracker mortgage is linked to the Bank of England Base rate (BOE) or the London Inter Bank Offered Rate (LIBOR), by a margin which is agreed from outset and will remain until the end of the product term.
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The overall cost for comparison is 5% APR. The actual rate available will depend on your circumstances. Ask for a personalised illustration.
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The more popular base to link to would always be the BOE base rate as this has always been marginally less expensive than LIBOR and history would indicate that it would be less volatile
The current BOE rate today in June 2012 is 0.05%, which it has remained at for nearly three years, whilst LIBOR is around 1.0%. The margin over the base rate is the key to how competitive the product is. Linked to the lenders arrangement fee, which although added to the loan, does underpin the rate of interest charged. Borrowers should always compare the product with a large fee that appears to be the most competitive against one that may not have the same headline rate. However, what impact does the fee have on the margin being charged? In most cases there is very little difference to choose between the two products.
Lenders, as you can imagine, would prefer to use LIBOR as the base as they will make more money from the product. To add to the attraction, LIBOR is reviewed quarterly, which makes changes to client’s repayments less onerous than BOE, which is reviewed monthly.
If you would like to discuss any of the plans that are available to you today, please call Michael J Alexander on 03452 605506. We are Independent Mortgage Advisers with over 40 years of experience in Financial Services, and have access to the whole of the market and to all of the mortgage clubs who offer exclusive products only available via intermediaries.