The benefits of UK base rate tracker mortgage

A UK base rate tracker mortgage tracks the lenders base interest rate. As the lenders base interest rate varies, their 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 (up to around 0.25% or so) above the lenders base interest 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 rates depending on their business circumstances. They may choose not to pass on a drop in rates to variable rate mortgages, even if they set their lenders 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 base interest rate by the full amount.

benefits

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

When the lenders base 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 lenders base interest rate in financial papers and publications.

risks

Your tracker mortgage interest rate will rise as the lenders 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.

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