Tracker Mortgages Are They Worth The Gamble

Tracker Mortgages Are They Worth The Gamble



Tracker Mortgages – Are They Worth the​ Gamble?
How well do you​ know the​ money market? a​ tracker rate mortgage has a​ variable rate,​ usually a​ set percentage above or​ below the​ Bank of​ England’s base rate .​
The arrangement is​ for a​ specified period of​ time,​ generally the​ first few years of​ your mortgage .​
Your monthly payments will move up and down according to​ the​ fluctuations of​ the​ base rate.
One of​ the​ advantages of​ a​ tracker is​ that your interest rate is​ ‘tied’ to​ the​ Bank of​ England’s,​ not your lender’s SVR .​
This means that your rate is​ set by an​ independent body,​ and even if​ your lender decides to​ make a​ steep hike in​ their rates,​ you​ will be unaffected .​
If the​ base rate falls,​ you​ will benefit from a​ drop in​ monthly payments .​
However,​ by the​ same token if​ the​ market rises you​ will be subject to​ increases in​ your mortgage premiums .​
Taking on​ a​ tracker mortgage depends on​ how you​ think the​ market is​ likely to​ change over the​ next few years .​
While none of​ us can foretell the​ future,​ you​ can use advice and research to​ make an​ informed opinion.
The current climate
For the​ past few years,​ the​ base rate has been set at​ a​ relatively low figure .​
This has kept mortgage rates particularly low,​ and has given the​ housing market a​ substantial boost .​
Some experts think it​ is​ bound to​ rise in​ the​ near future,​ although many fears of​ a​ resulting crash in​ the​ housing market have already proved groundless.
If you​ are fairly confident that the​ base rate will be kept low by the​ exchequer,​ you​ may want to​ take a​ gamble with a​ tracker mortgage .​
As with many of​ the​ other ‘discounted’ and ‘special offer’ mortgages,​ there may be heavy penalties incurred if​ you​ want to​ change mortgage or​ lender before the​ tie in​ term has expired,​ though trackers do tend to​ have less penalties than others.
The tracker type of​ borrower
A sound suggestion is​ to​ consider your own financial situation,​ rather than trying to​ predict the​ market .​
If you​ are fairly confident that you​ will be able to​ handle fluctuations in​ your mortgage repayments,​ then a​ tracker can be a​ worthwhile risk.
The Bank of​ England monitors the​ economic situation,​ and assesses financial forecasts .​
It will then usually adjust the​ interest rate accordingly – lowering the​ rate to​ encourage the​ market or​ raising it​ to​ moderate inflation .​
You can check the​ minutes of​ monthly meetings and find more information at​ www.bankofengland.co.uk




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