Why not switch to a tracker mortgage

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Why not switch to a tracker mortgage
By: Graham Bradlington , Posted On: 2008-02-17

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Fixed-rate home loans may be in m

de, but with a reduction in r

tes imminent it would be advisable to c

nsider the tracker option instead. Fixed-rate m

rtgages have been very popular in r

cently but with all the talk

bout interest rate cuts, a tracker m

rtgage could be the way to go.

Even th

ugh interest rates have been kept on h

ld over recent months, indications point to a gr

dual reduction over the coming months and y

ar ahead. A tracker mortgage would be a s

nsible option as it follows the m

vements of the Bank Of England b

se rate.

According to the Council of M

rtgage Lenders, fixed rate mortgages reached a p

ak in August 2007 and they

ccounted for almost 80% of all m

rtgages taken out in the UK.

For th

se who want the reassurance of kn

wing exactly how much their mortgage r

payment will be each and every m

nth, a fixed rate mortgage is the pr

ferred option. This even more this c

se in market conditions where there is an

pward trend in interest rate rises. N

-one wants to fix an interest r

te at the peak of the

nterest rate cycle, so a tracker m

rtgage is becoming an increasingly attractive

ption.

A tracker mortgage is named in th

s way since it tracks the m

vements of the base interest rate fr

m the Bank Of England. The m

rtgage repayment is caluculated upon the c

rrent base rate and a set f

xed percentage is added to this r

te. The mortgage repayments fluctuate in l

ne with the movement of interest r

tes. This could be deemed an

deal mortgage when the trend of

nterest is downward. The result is th

t when the Bank Of England c

ts interest rates, your mortgage repayment

mount reduces accordingly. The fixed amount ch

rged in addition to the base r

te can vary from lender to l

nder, so it is wise to sh

p around for the best deal.

With tr

cker mortgages you can choose to h

ve a fixed period, such as two or thr

e years, where the mortgage interest r

te will track the Bank of Engl

nd base rate. Once this period had

xpired the mortgage will revert back to the st

ndard variable interest rate charged by the l

nder.

With this kind of mortgage there are the

ptions to revert to a tracker for a f

xed period which is usually 2 or 3 y

ars. The mortgage repayment will be c

lculated upon the Bank Of England's b

se rate during this period. After the

greed tracker rate period expires then the m

rtgage will revert to the standard v

riable rate. During a period of

nterest rate reductions, your mortgage repayments w

ll decrease accordingly. After the product

xpiry date you will have the

ption to review and make a f

rther decision based upon market conditions at th

t time.

The article Why not switch to a tracker mortgage was Submitted by Graham Bradlington through Articles.GetACoder.com network. Here's the additional information: Graham Bradlington is the mrketing manager for Quickly Finance Limited, a cmpany which specialise in Fast track Secured Loan & Remortgage applications for homeowners. Quickly Finance is 100% independent & can search the whole market for the best deals... quickly! For more info: www.quicklyfinance.com

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