Start Your Tracker Mortgage Application Today With Lending Expert!
A tracker mortgage is a type of home loan where interest rate is governed by a publicly available benchmark such as the European Central Bank. So, your monthly payments will consist of the base rate plus a set percentage.
Due to the structure of a tracker mortgage, the monthly repayment will vary from month-to-month. If the base rate increases as will your monthly payment. However, if the base rate falls, your monthly payment will be lower.
Currently, the base rate is at a record low due to the economic crisis in the aftermath of the Coronavirus pandemic. This means that the base rate is just 0.1%. For a tracker mortgage, this would mean that if that interest rate is +1%, the monthly payment would be the interest rate plus the base rate so a total of 1.1%. If the base rate increases, your interest rate on the tracker mortgage would also increase.
Lending Expert is a tracker mortgage broker and can compare over 1,000 mortgage deals across the UK. Whilst high street banks can offer tracker mortgages too, we can help find the best option for you with rates from 1.39% per month, whether you are looking for repayment, fixed, variable, tracker or have a bad credit history.
Start by clicking on ‘Check my Eligibility’ below and enter some basic details about you and your property – and Lending Expert will be able to help you find the best tracker mortgage according to your requirements.
- Different monthly repayments
- Combined monthly payments (interest and capital)
- Rates from 1.39% per month
- Borrow up to £2 million
- Loan Term – typically two to five years
- Sometimes come with a minimum interest rate (‘collar’)
- Minimum 25% deposit
- Interest-only, fixed, tracker mortgages available
- Rent charged should be 125% to 145% of mortgage repayments
- Free tool to compare tracker mortgages
What Is a Tracker Mortgage?
A tracker mortgage is the name given to mortgages which ‘track’ the base rate set by the Bank of England plus a specific extra margin.
Tracker mortgages are a type of variable rate mortgage meaning that each monthly payment is different and can rise or fall based on changes in interest rate.
Some tracker mortgage providers have a ‘collar’ or ‘floor’ meaning that there is a cap on how low the interest rates can be. However, the majority of tracker mortgages also have a switch & fix feature which would allow you to change to a fixed mortgage arrangements should the rates become too high.
How Much Is a Typical Tracker Mortgage?
Tracker mortgages are unlike fixed-rate mortgages in that you will not be paying the same amount per month throughout the duration of the mortgage deal.
Typically, tracker mortgages can work out as cheaper than a standard variable rate (SVR) mortgage and tend to be more predictable. The key difference is that tracker mortgages are governed by a national benchmark whereas SVR mortgages are at the whim of the lender.
If you have a tracker mortgage, the interest rate repaid per month will be the base rate plus or minus a certain percentage.
The Bank of England base rate has been very low (below 1%) for more than 10 years. If the interest rate is low, it means that you might be able to overpay your mortgage and pay off your mortgage more quickly.
To work out exactly how much your tracker mortgage would cost, use our calculator or speak to one of our team at Lending Expert today.
What Areas of the UK Does Lending Expert Cover as a Tracker Mortgage Broker?
We proudly offer tracker mortgages across the entire UK, Scotland and Wales including Birmingham, Brighton, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Nottingham, Newcastle, Sheffield and more.
How Much Can I Borrow From a Tracker Mortgage?
Speak to an expert today in order to find out how much you can borrow from a tracker mortgage.
Can I Get a Tracker Mortgage?
- Aged 25 to 85 years’ old
- Minimum income of £25,000 per year
- Minimum deposit 25% of overall property value
- Good credit status
- Strong financial record (limited defaults, arrears)
Tracker mortgages can often have more strict lending criteria for borrowers.
What Other Factors May Impact Eligibility for a Tracker Mortgage?
Many different factors could impact your eligibility to secure a tracker mortgage.
These include, but are not limited to, the following:
- Credit score (this can affect the agreed interest rate)
- Debt-to-income ratio
- Home location
- Deposit amount
- Monthly income
- Home price and loan amount
- Work history
Is a Tracker Mortgage the Best Option for You?
Borrowers looking to take out a tracker mortgage may benefit in some months from lower monthly payments meaning they may save money in the long-run. Additionally, introductory tracker rates can often be extremely low when compared to other variable interest rates.
Tracker mortgages offer a great deal of flexibility. For example, borrowers can benefit from cheaper arrangement fees, cheaper early repayment charges and flexible ‘switch & fix’ features. This means that borrowers can change their arrangement if it is not working for them and may even be able to pay off their mortgage earlier without incurring extra fees.
However, many tracker mortgages come with a ‘collar’ rate meaning that if rates fall below a certain level, you will not benefit from reduced payments. Similarly, if interest rates go up, your monthly payments will increase.
When the introductory rate period ends, your mortgage plan will go onto another tracker rate or your lender’s standard variable rate, which tends to be higher.
These types of mortgages are not recommended for borrowers who crave predictability, stability and the ability to plan their finances in the long-run. For that personality type, a fixed-rate mortgage is often preferable.
What Is the Difference Between Variable and Tracker Mortgages?
The key difference between a tracker mortgage and a variable mortgage is that a variable mortgage will follow the Standard Variable rate of whichever bank has created the loan. Tracker mortgages, on the other hand, follow the Bank of England base rate meaning that they are potentially prone to fewer surprises.
Tracker mortgages are often confused with discount mortgages. In general, discount mortgages are thought to be slightly cheaper than trackers, but this is dependent on the lender.
With discount mortgages, the lender’s SVR is tracked, rather than the Bank of England benchmark interest rate.
As such, discount mortgages could be cheaper or more expensive than a tracker deal, which follows the base rate prescribed by the Bank of England.
For that reason, tracker deals tend to be more reliable and predictable as they are prone to far less fluctuation in price than discounted mortgages.
Tracker Mortgage Providers
Due to the very low Bank of England base rate, many banks and building societies stopped offering tracker mortgages or setting more strict minimum rates in their terms and conditions in order to control the prices.
However, there are still many lenders on the market who offer competitive rates for tracker mortgages.
At Lending Expert, we compare the tracker mortgage market in order to find the best provider to suit your needs and the most suitable type of mortgage.
Rather than approaching the lenders directly and dealing with their in-house advisors, working with a mortgage broker will offer impartial advice to get you the best deal on the market.
How Do I Compare Tracker Mortgage Rates?
Working with a mortgage broker such as Lending Expert will help you find the best mortgage to suit your circumstances without impacting your credit rating.
Contact us today to speak to an expert and start comparing tracker mortgages to find the best option for you.
What To Consider Before Getting a Tracker Mortgage
Prospective buyers should always consider the following factors before deciding to take out a tracker mortgage:
- Annual income
- Credit score
- Current interest rate according to the Bank of England
- Amount you are able to put down as a deposit
- How much you want to borrow overall
- How much equity you have
- Whether you are looking to buy with someone else
- Job stability
- Purpose of the mortgage (e.g. first-time buyers, investment property)
What Happens if I Do Not Keep Up With Repayments?
Your tracker mortgage is secured against the property meaning that any late repayments will lead to a damaged credit score, late penalties and maybe even risk of property repossession from the lender.
Why Use Lending Expert As Your Tracker Mortgage Broker?
Working with a number of high street banks and specialist mortgage lenders, Lending Expert has access to over 1,000 mortgage deals available and is in the perfect position to help you get approved and get the best rates.
Our eligibility checker is completely free to use and can provide an indicative quote, with no obligation.
Founded in 2013, we have years of experience working in the secured loan and mortgage market and have helped thousands of customers to date. Our values have always been to find the right product for the right individual at the competitive rate – and we are pleased to offer our services for you today!