Interest rates keep falling, but is a tracker mortgage right for you?
While Yorkshire rates are incredibly low, as a tracker it may not be suitable for everyone and there is a chance your payments could go up. Ray Boulger of mortgage broker John Charcol warned, “Given a likely increase in the base rate early next year, and possibly as early as December, any borrower who takes out this mortgage, especially for a purchase, may never actually pay that rate.”
However, Aaron Strutt of mortgage broker Trinity Financial added, “At the moment it seems unlikely that the base rate will rise anytime soon. After many of their floating rate deals have been concluded, more and more banks and building societies are offering flexible tracker rates.” mortgages again. “
- Tracker mortgages are great while the base rate is low, but that could change. Yorkshire’s Tracker follows the Bank of England’s official lending rate. This does not mean that it is the same as the base rate, but that it moves accordingly. The positive side of a tracker mortgage is that you have the peace of mind that only economic changes can move your interest rate. But when prices go up, so will you.
- What kind of deal is best for you? Fixes vs. variables, two-year vs. five-year fixes, and more. Fixes are useful when you need to know that your monthly payments won’t change during the initial term – although fixes come in different lengths. A term of five years can make sense if, for example, you don’t want to move during that time, but if you do you need to check if the mortgage is transferable. If you fix 1% for five years, your interest rate will stay at 1% for those five years – it cannot change. With a 5 year tracker at 1%, that 1% rate could go up or down during this time. See Fixes vs. Variables.
- You can use a mortgage calculator to compare the best deals, but unless you are a real expert it is usually best to hire a mortgage broker to actually make the switch – they can ALL of your options and the credit criteria Lender Explain. To compare the best deal, fill in your information on our Mortgage Best Buys comparison tool and read our Guide to Finding Cheap Mortgages for help finding a broker.