Tracker Rate Mortgages

A tracker rate mortgage is a variable rate mortgage which has a fixed upper rate limit (the cap).

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Can we help with tracker rate mortgages?

YES We Can

Tracker rate mortgages have fallen out of favour since we have experienced lower interest rates for a number of years, and most clients now prefer some certainty of what their mortgage repayments will be to allow them to plan their finances accurately.

Prior to the recession in 2008 Tracker rate mortgages were popular as they were seen as a way of taking advantage of the changing markets with interest rates falling at that time.

With the recession we saw interest rates starting to rise again and as Tracker rate mortgages were then linked to the BOE base rate or Libor ( which no longer exists ) we saw tracker rates rising each month or three months for Libor linked plans.

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In the current market we see the BOE base rate at 0.75% with the long term forecast that interest rates are set to rise following our exit from the EU when we will have to invest heavily in our social services, transport, health, housing, police, armed forces and industry across the UK.

The need and the popularity of Tracker Rate mortgages may return, but in the current market fixed rates appear to be the first choice of most clients as they prefer the security and certainty that fixed rates provide, together with more stress free environment.

Tracker Rate Mortgages Questions and Answers

What is a Tracker rate mortgage

A tracker rate mortgage plan got its name because it will track the BOE ( Bank of England Base Rate ) plus an agreed margin

Will my repayments vary

Yes as the BOE rate which is reviewed each month, changes your monthly repayment will reflect any change, up or down.

Does the lender protect itself if rates fall to an all time low.

Some lenders have a “ collar “ which means the rate cannot fall under the collar.

Are any of the Tracker Rate Plans flexible

Yes some lenders do allow you to switch to a fixed rate without penalty

Can I overpay with a Tracker Rate Mortgage

Most Tracker Rate plans will allow you to overpay by normally 10% of the debt without penalty.

Important Considerations for Tracker Rate Mortgages

1 If interest rates fall so will your mortgage repayments

2 A new tracker rate can be among the lowest on the market for variable rate plans

3 Lenders fees for tracker rate plans tend to be lower than for Fixed rate plans

4 Early redemption penalties for Tracker Rate plans tend to be lower than for fixed rate plans

5 Some lenders offer the ability to a fixed rate plan with them without penalty

1 If interest rates fall and you have a “ collar “ built into the plan you will not benefit if rates fall under the collar.

2 If interest rates rise so will your monthly repayments

3 Ai the end of the plan you will normally switch to a SVR ( standard variable rate ) which is when you should review your options in the market at that time to see if a switch to another lender would benefit you with more attractive terms.

Getting a Tracker Rate Mortgage Needn’t Be Difficult. The mortgage marketplace in 2020 is constantly changing, with lenders looking for business, meaning their lending criteria is always under review.

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Relevant Products

Fixed Rate Mortgages

We can help with a range of fixed rate mortgage products with competitive rates and terms.

Tracker Rate Mortgages

If you are looking for a mortgage with a rate that follows the base rate set by the bank of England – we can help.

Capped Rate Mortgages

If you are looking for a capped rate mortgage we can help, we have access to a wide market of lenders who can help.

Bad Credit Mortgages

If you have bad or adverse credit we may be able to help you secure a mortgage – from IVAs to CCJs we can help.

Standard Variable Rate Mortgages

If you are looking for a standard variable rate mortgage with competitive rates & terms we can help.

Repayment Mortgages

We can help with repayment mortgages – you’ll make monthly repayments for an agreed period of time on capital & interest.

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Capped rate mortgages are a type of variable rate mortgage product, but with one important difference: they have an interest rate ceiling or “cap”, beyond which your monthly repayments can’t exceed. A capped rate mortgage is usually only for an introductory period between 1 to 5+ years.

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More Information on Tracker Rate Mortgages

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 August 2018 0.75%, which it has remained at for nearly 2 years, whilst LIBOR is around 0.9%. 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 0800 802 1003 . 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.

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Get started today. Simply fill out our enquiry form and a member of the Michael J Alexander team will be in contact.

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