A tracker rate mortgage or tracker mortgage follows the Bank of England Base rate.
The Bank of England Base rate is set by the Bank of England’s MPC Monetary Policy Committee, this is usually amended to aid the balancing of inflation across the uk.
A tracker mortgage has a set point above the Bank of England Base rate and the interest rate tracks the base rate fluctuations at that set point above it.
If you have a £300,000 Tracker Mortgage on a 1.25% above base tracker mortgage, with the base rate at 0.5% over 25 years you will pay £1235.00 per month.
If the Base rate increases by 0.5 % to 1% this will increase your monthly payments to £1308.00 per month.
During your initial term which is normally:
- 2 year tracker
- 3 year tracker
- 5 year tracker
The amount you pay above the base rate will not vary you will continue to pay the same for that initial period.
Once this initial period has concluded you will switch to the banks SVR (standard variable rate) which is normally higher, so it is always advisable to contact us for a remortgage at this time 01702 619 221.