Tracker Mortgage

Sam · Posted: Thu Jun 03, 2004 2:25 am Post subject: Tracker Mortgage

Tracker Mortgage is a very popular mortgage product and is based on Bank of England's base rate. Here the mortgage repayments are linked to monthly movements in the Bank of England base rate. It is also known as just variable rate mortgage.

Advantages of tracker mortgage are as following:

Tracker mortgage is a good idea, when the Bank of England's repo rate is stable or falling.
A borrower will be benefited from any reduction in Bank base rate, even if the lender delays in reducing its standard variable rate, to reflect the reduction.

Disadvantages of tracker mortgage are as following:

It significantly affects a borrower's monthly disposable income.
When the rate of interest rises, there is a corresponding increase in borrower's monthly repayments and he may suffer loss.

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