Base Rate Tracker Mortgage
Hot Topics
- How Does A Joint Mortgage Work?
- When you decide to get a mortgage with another person – both your incomes can be taken into account. The general rule is that you can borrow three times the first income plus half of the second income, or two-and-a-half times the joint income.
- Do I Need a Guarantor?
- If your lender is concerned about your ability to meet your mortgage commitments, they may ask you to provide a Guarantor.
- Base Rate Tracker Mortgage
- A base rate tracker mortgage tracks the Bank Of England’s base interest rate then adds on a additional figure to arrive at the borrowers variable rate. Your monthly mortgage interest payments go up when the base rate goes up and they go down when the base rate goes down. The base rate tracker interest rate is usually between 0.5% and 1.0% above the Bank Of England's Base Rate.
- What are Self Certification Mortgages?
- When you apply for a mortgage, the lender will require from you proof that you will be able to maintain the mortgage payments, and do not present a risk of non-payment for the large amount of money you are borrowing.
- I Have Been Turned Down For A Loan Or Credit Card, Will I Still Be Able To Get A Mortgage?
- If you have been turned down for a credit card or loan, then you need to find out why your application was rejected before you apply for a mortgage.
A base rate tracker mortgage tracks the Bank Of England’s base interest rate then adds on a additional figure to arrive at the borrowers variable rate. Your monthly mortgage interest payments go up when the base rate goes up and they go down when the base rate goes down. The base rate tracker interest rate is usually between 0.5% and 1.0% above the Bank Of England's Base Rate.
Base rate Trackers are usually available for a fixed period or term agreed between borrower and lender at the outset of the mortgage. Some lenders will offer a tracker that lasts for the entire mortgage term.
Lenders usually base the percentage differential, between the base rate and base rate tracker, on your homes Loan to Value. A home swith a low Loan To Value rate is much more likely to achieve a low tracker interest rate than a home with a high Loan To Value rate.
Although the base rate tracker mortgage is generally a low interest rate mortgage, and can be combined with a discount for a fixed period, it still has its downsides.
Redemption Penalties
As with all fixed period mortgage interest rate schemes many lenders charge a redemption penalty if you leave the mortgage scheme early. Some lenders will also charge an overhanging redemption penalty, this is where the redemption penalty still applies after the base rate tracker fixed period is over.
Financial Planning
Financial planning is particularly difficult with this type of mortgage, as the base rate fluctuates so will your repayments, this makes budgeting particularly difficult.
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