Tracker MortgageLoan Tracker
Is a Tracker Mortgage? - mortgages - guidelines
A tracker mortgage is essentially a floating interest mortgage. The difference between them and other variable-rate mortgage loans is that they replicate - trace - replicate the movement of another interest payment. The tracker installments do not correspond to the installments they are tracking, but are above this installment with a "margin". Launch bids tended to have a lower spread, e.g. base plus 1.00%.
Thus, at a basic interest of 0.5%, the interest payable would be 1.50%. Tracker mortgage loans with longer maturities would have a higher spread, e.g. basic interest plus 3.5%. Trackers can be for an initial introduction time ( usually from one year to five years), or you can get a life-time tracker, which means you'll be there for the entire life of your mortgage.
When you are on an introductive tracker rating, your mortgage will usually go to a variable standard or another tracker rating (with a higher margin) at the end of the first semester. Several mortgage financiers will also put you on a tracker rating once you have completed an introducing fixed-rate mortgage transaction.
What Does A Tracker Mortgage Rate Do ? One tracker follows another. Since the interest is floating, you will profit from lower repayments if the interest is low, but will experience higher repayments if the interest goes up. Initial tracker interest may be among the earliest mortgage interest available.
As with all floating interest rate instruments, however, they can go both up and down. Even most initial tracker installments will most likely have an early repayment penalty if you pay back or reimburse the mortgage during the introduction phase. When you are on a life-time tracker mortgage, there will sometimes be a prepayment penalty for a certain amount of time after you have taken it out.
Tracker Rates mortgage loans allow you to make an overpayment without a prepayment penalty - normally you can pay up to 10% of the amount each year.