Would you recommend a tracker mortgage?

Question

I have been given an tracker mortgage offer but am not sure weither it is right for me, could this type of mortgage be a higher risk than others

Answer 1

a tracker is always a higher risk as it will follow the base (or LIBOR) rate of the bank - so there fore - the bank of england sets an interest rate and the LIBOR is the rate the bank itself sets.

your tracker will go up or down in line with this rate.

there has just been an interest rate raise - and they are predicting more - i would go for a fixed rate - for at least two years - you might pay a very slight amount more - but you know its not going to change.

to have a tracker you have to know that you could afford your mortgage to go up - so if you were only borrowing a small percentage of your equity it could be ok, but if you are tight on cash i wouldnt do it

good luck -

helen x x x

Answer 2

If you were offered a "tracker mortgage" (or any mortgage at that matter) and you're still on the fence about it, then it's obvious you were NOT, or have not been given enough information by the loan officer about its benefits, and most importantly, how it benefits YOU! Which also makes it obvious, that you have NOT been presented with other loan options. A good loan officer would present at least 3 side-by-side loan comparison and clearly explain to you the differences, so YOU CAN MAKE AN INFORMED DECISION! A loan officer SHOULD, at the very least, inquire about your current financial position and your future plans. Example, if your plan was to sell (or refinance) in a couple of years, a loan officer SHOULD discourage a 30 year fixed and offer an adjustable loan!!

A mortgage is the most important single financial transaction you will make in your life! You're the one that will be making that payment long after it's closed...NOT your loan officer. So, my advice is...whatever loan you decide on, make sure it fits YOUR NEEDS! And NO, I'm not a loan officer, I'm a mortgage planner!

Answer 3

With a Tracker Mortgage your rate will be set a certain fixed percentage above or below the Bank of England base rate, currently 5%. So when the base rate changes, your rate will follow within one month of the change to the base rate.

It's a risk but pretty much the same as a ARM's here in the states. I see more people taking ARM's now than a fixed rate.

Answer 4

I would say a tracker is fine, you can always ditch it after a few years anyway, never sit around with the same mortgage, change, or ask your excisting lender for a better deal or you will leave them! Do this every four or five years to get better deals and capped rates! Dont go for an endowment mortgage tho, they are uncool now!
I would say have a caped rate for 2 years and a product you can pay more into if you have any extra cash, without a 'pay early penalty'!

Answer 5

A tracker mortgage tracks the backside fee at a fixed share. So if the present base fee is 0.5% and the tracker is a 2% above base fee you will pay 2.5%. confident, if costs of interest bypass up you will pay extra, and you have not any way of understanding how intense costs of interest are going to be. on the 2d the top type on fixed fee mortgages is something like 5% so the backside fixed fee you may get assumes that costs of interest will upward push via 3% in the life of the fixed fee. there is an option that's the capped mortgage, the compromise being which you pay a stronger fee above base than an easy tracker, yet whilst costs of interest bypass above a undeniable element the month-to-month money would be capped at that element. i can not via regulation provide advice in this count number, you're able to desire to touch a qualified IFA. yet i can assert that in the time of my view, Calculate your optimum affordability (in many circumstances 35% of internet earnings) and despite of that share you do not use to pay your guy or woman loan could desire to be positioned right into a secure interest bearing account, so as that if costs of interest do upward push to the element that extra advantageous than 35% of your earnings is mandatory to fulfill money you could fall decrease back on those mark downs till your earnings rises to fulfill the call for.

Answer 6

It's safer then the lenders Standard Variable Rate.
It might be higher risk than a fixed rate though.
Only you can decide whether it's right for you, it depends whether you don't mind paying a bit more each month but knowing that the payment stays the same for a fixed period, as with a fix.
Or if you don't mind it going up and possibly down.

Answer 7

As above, use a mortgage adviser as they will make a recommendation and give you advice, rather than a bank's employee who just gives you info and lets you make the decision. Difference is if the advice is wrong, you can complain, if you make the wrong decision, you cannot