Home » Finance » Mortgage

Are Tracker Mortgages Worth It?

Aug 17, 2007
Tracker mortgages are one of the most common types of mortgage around, but they can be confusing if you are new to the mortgage world. Tracker mortgages have a number of benefits as well as dangers, and it pays to know about these before shopping around. If you are looking for a mortgage then here is some advice about tracker mortgages and if they are right for you:

What is a tracker mortgage?

A tracker mortgage is fairly similar to a normal variable rate mortgage, although the variations in interest are much quicker. A tracker mortgage follows the base rate of interest imposed by the Bank of England; any changes in the rate will be reflected in your mortgage payments. Whilst variable rate mortgages usually take months to change, tracker mortgages will change rates within 14 days of a new rate being announced. This means that you can more quickly benefit from any drops in the rate. The change is compulsory, and part of the contract of a tracker mortgage will state that the interest rate must change in accordance with the Bank of England within a certain timeframe.

What are the advantages?

The obvious advantage of a tracker mortgage is that if the interest rate drops, then your payments will drop within a few weeks of the change. This means your mortgage stays competitive and is always in line with the current market level. This mortgage is great for people who want their mortgage to reflect the changing costs of borrowing, but also don't mind if their repayments fluctuate.

What are the problems?

The problem with a tracker mortgage is that if the interest rate rises, you will be left with higher payments almost straight away. If you are on a budget then higher payments could leave you in financial difficulty and unable to make your repayments.

Types of tracker

There are a number of types of tracker mortgage. The first type is the tracker mortgage that simply follows the base rate changes for the entire mortgage term. The second is one that runs with the base rate for a while before return to a standard variable rate, and the third is one that has a limit on how far the tracker rate can change. Finding the best type for you requires shopping around and looking at your circumstances in detail.

Who should get a tracker mortgage?

A tracker mortgage is good for people who can cope with fluctuations in payment, and so can afford to take the risk that the payments will rise in exchange for the chance that they will get lower. You should look at your financial situation rather than trying to predict the future interest rate. If you can afford higher payments at some point then you could benefit from low interest rates, and so pay less for your mortgage.
About the Author
Peter Kenny is a writer for creditcards-gb.co.uk.
For additional articles and an extensive resource for everything about credit cards, please visit us at UK Credit Cards and UK Mortgages
Rating:
Please Rate:
(Average: Not rated)
Views: 166
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources