UK Base Rate Tracker Mortgage

A UK base rate tracker mortgage usually tracks the Bank of England base rate. As the Bank of England base interest rate varies, the lenders UK base rate tracker mortgage interest rate varies by exactly the same amount. The tracker interest rate is guaranteed to track at a fixed difference above the Bank of England base rate. This difference can be for a set period or for the full term of the tracker mortgage.

Although this sounds similar to a standard variable mortgage, the difference is that with a standard variable mortgage, a lender chooses whether to pass on any change in Bank of England rates depending on their business circumstances. Lenders may choose not to pass on a drop in rates to variable rate mortgages, when the Bank of England set their base interest rate lower, simply to earn higher income. With a UK base rate tracker mortgage the lender guarantees to pass on any change in the Bank of England base interest rate by the full amount.

Benefits of a UK Base Rate Tracker Mortgage

With a UK base rate tracker mortgage, the mortgage interest rate is fixed above the Bank of England base rate and tracks that rate exactly. Hence you will always be able to calculate your interest rate exactly with a tracker mortgage.

When the Bank of England base rate falls, your tracker mortgage interest rate will fall by the same amount.

You will know when your tracker mortgage interest payment will fall or rise by monitoring the Bank of England base rate in financial papers and publications.

Risks of a UK Base Rate Tracker Mortgage

Your tracker mortgage interest rate will rise as the Bank of England base interest rate rises, by the same amount.

It is possible that occasionally the tracker interest rate will be higher than the best standard variable mortgage rate available in the market during a given period, so you may pay more interest than is necessary during some periods.

For further advice and to talk to a mortgage adviser about arranging a UK Base Rate Tracker Mortgage just click on the enquiry button below, fill in brief details, and an adviser will call you within the next 24 hours.