Tracker Home Mortgages

What exactly are tracker home mortgages?

Tracker home mortgages refer to the way that the interest portion of the mortgage is repaid. Tracker mortgages track the Bank Of England’s base rate (the interest the lender is charged). As the base interest rate increases so does the interest rate on the mortgage, as it decreases the mortgage interest rate does likewise.

Typically tracker home mortgages are advertised as 0.25% over Bank Of England base rate for two years that means that for two years your interest rate will be 5.25% if the Bank Of England’s base rate is 5%. If it increases your interest will increase, if it decreases yours will do the same.

Also available are lifetime tracker home mortgages where the lenders may offer 0.75% over the Bank Of England base rate for the entirety of the term of the mortgage. The same applies to this one as in the above example.

The benefit of tracker home mortgages is that lenders usually charge 2% over the Bank Of England base rate as their standard variable rate. So these are effectively discounted mortgages. But, and there is always a but, if the Bank Of England base rate rises so do the repayments on your mortgage.