Base Rate Tracker Mortgages

Base Rate Tracker Mortgages

Most Base Rate Tracker Mortgages are available for a fixed period of about 2 years but some Lenders will offer 3, 5 or even 10 years, then at the end of the period offered the tracker rate will revert to the Lender's standard variable rate.

The advantage of the Base Rate Tracker Mortgage is that it offers a lower interest rate in the time period offered at the beginning of your loan before it reverts to the standard rate.

The disadvantage of this type of mortgage is that if the Bank of England base rate increases then the monthly payments will rise to, so this needs to be considered when working out your budget.

Also early redemption penalities can be expensive, so you need to shop around and check the small print.

Rate changes are generally made as soon as the base rate itself changes, so you must be aware your payments will either decrease or increase immediately.

Some Lenders cap the interest at a certain point above the base rate, this helps if the base rate inceases it will not cost you too much but on the other hand if it decreases below the capped level your tracker mortgage will stand still so you would not see any benefits.