A tracker mortgage or (tracker rate mortgage) is a variable rate mortgage that will track the Bank of England base rate at a set amount above or below for a fixed period.
Therefore, for the agreed 'tracker' period the monthly payment on the tracker mortgage will vary in line with any changes in the base rate. Put simply, if the base rate goes up, your payments will rise and if it falls then so will your payments. The different between your tracker rate and the base rate during the fixed period will not vary.
A tracker mortgage is useful if you want to be able to benefit from falling interest rates but you must be certain that you can afford any increases as well.
At the end of the fixed 'tracker' period your payments will normally revert to the lender's standard variable rate (SVR) or to a higher margin above the base rate.
Select from the list below to find out more about the different types of mortgages or call us for a no obligation chat on 0800 066 5570.
Charcol is not authorised to offer investment advice. We recommend you seek professional advice with regard to these topics if you believe they may affect you.