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Tracker Rate Mortgages Explained
Tracker Rate Mortgage
Tracker rate mortgage schemes follow movement in the Bank of England base rate at an agreed differential.
The Tracker rate mortgage is available for a fixed period or the life time of the loan. The most common tracker rate period is 2 years, though many mortgage lenders now offer 3 year, 5 year and even 10 year track rate mortgages.
If the tracker rate is for a set period of time the mortgage will revert to the lenders standard variable rate at the end of the tracker rate period.
Pros and Cons of Tracker rate mortgages
- Lower interest rate in the first few years then the lenders standard variable.
- You will benefit from all reductions in the Bank of England's base rate.
- Early redemption penalties can be onerous and expensive and may apply.
- If the Bank of England base rate increases your monthly payments will rise in line with it.
- It is less easy to budget as the interest rate might vary.
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For more information on tracker rate mortgage products from our professional mortgage advisors contact us today for mortgage advice
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We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £500
Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.
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