11th March 2013
If you are currently searching for the perfect Mortgage in Peterborough, you’ve probably stumbled upon the odd tracker mortgage here or there. But not understanding what they are doesn’t mean you can just look the other way, because a tracker mortgage might be the ideal mortgage for you.
A tracker mortgage is a type of variable rate mortgage. The other variable rate optionbeing a discounted variable rate mortgage.
Tracker Mortgage Peterborough
If you were to have a tracker mortgage, the interest rate would be determined by a specific central rate. Most commonly this rate will be that of the Bank of England’s base rate but on the odd occasion a tracker mortgage may be determined by a different base rate.
How Will Your Mortgage Repayments Work?
Your monthly repayments for your tracker mortgage will be based on fluctuations in the Bank of England’s base rate, so that if your tracker mortgage is at 3% over the Bank of England’s base rate then your repayment will be 3.5% as the base rate is 0.5%. And thus if the base rate changes to say 1%, this would mean that your repayment would alter to 4%.
As you can see it’s all quite self-explanatory once you’ve understood the main idea behind a tracker mortgage, which is why they are the preferred option for many. Everything is clear, so people feel happier making their repayment because they know where any changes originate.
Discounted Variable Rate Mortgage
This type of mortgage is very similar, but instead of your rate being based on the Bank of England’s base rate, it will be based on the standard variable rate (SVR) of your mortgage lender. The negative of this is that whilst the rate stays roughly in line with Bank of England’s base rate, your lender can opt to amend theirs at any time and you would have to obey this in line with your mortgage contract.
Which Mortgage is the one for me?
Tracker mortgages are great with respect to the fact the Bank of England only change the base rate once a month and if no change is made, then great! In the meantime those with a discounted variable rate could be frequently affected by change if their lender chooses to alter their SVR.
On the other hand, sometimes the central base rate may change but a lender may choose to keep their standard variable rate the same, meaning that those on tracker mortgages will alter their rate accordingly but those with discounted variable rates will benefit from this lack of change.
For more information on a mortgage in Peterborough, get in touch with The Mortgage Broker Protection Ltd today or get in touch through our contact form
Upon application a fee of up to £495 will be payable (typically £195)Tags: mortgage peterborough, peterborough mortgages, tracker mortgage