Mortgages

 

Tracker Mortgages

Tracker rate mortgages are a variable mortgage generally based on the Bank of England base rate.

A tracker mortgage works on a set margin to a base rate, for example the Bank of England base rate, so for example if the Bank of England base rate was 5.00% and the product was a Tracker +0.50% above base the initial rate would be 5.50%. Therefore if the base rate moves so will your mortgage rate and the movement can be an upward or downward movement. So for example if the base rate was reduced from 5.00% to 4.75% your rate would then be 5.25%.

Trackers are available for set durations often 2 or 3 year periods or in fact for the entire term of the mortgage which could be 25 or 30 years.

Tracker mortgage for the term; The advantage of a tracker for the term of the mortgage means that you won't need to keep changing the mortgage product throughout the mortgage term so this may save you further arrangement fees and other charges that you may incur such as further valuation and or legal fees in changing to a different lender. Many lenders will still insist on a "tie in" period in the early years of a mortgage for the term often 3 years but after this period you are free to redeem at any time and often make overpayments for the duration of your mortgage.

If you have chosen a tracker to last for 2 or 3 years once this promotional period comes to an end the rate will normally revert to the lenders standard variable rate (SVR), or another margin above the Bank of England base rate normally a little higher for the remaining term of the mortgage. At Grovelawn Financial we would always contact you the customer 2 - 3 months before the end of the promotional tracker rate period to then see what is best for you and what your current circumstances may demand. The choice will be whether to stay with the same lender and perhaps switch to a further promotional tracker or fixed rate for another set period or move to an alternative lender that may be offering a free valuation and or free legal services in order to encourage you to move lenders and ultimately offer a more competitive deal to move your mortgage.

It will depend though on other aspects of your existing mortgage as to whether is best to stay with your existing lender or move and this may be determined by the additional charges lenders levy when redeeming your mortgage, all of this would be calculated by your mortgage advisor and fully explained.

Your property may be repossessed if you do not keep up repayments on your mortgage.

For more information on how we are paid for mortgages please click here.

Grovelawn Financial Services, 3b Restormel Industrial Estate, Liddicoat Road, Lostwithial PL22 0HD — T: 0845 458 2633