Tracker Mortgage

These are also known as rate tracker mortgages and track movements in the Bank of England base rate, they are set to follow the base rate plus a certain percentage, depending on the mortgage offer. Positives of this type of mortgage is that any cuts in the base rate are definitely passed on to you, but the downside is that your repayments will increase following an increase in the base rate.

Tracker mortgages are sometimes confused with discount mortgages, which are similar, but offer a discounted mortgage which tracks the lenders SVR (Standard Variable Rate), rather than the Bank or England base rate. You therefore run the risk that the lender will not pass on rate cuts.

For those wanting the security of a fixed repayment amount each month, fixed rate mortgages are a safer option.

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