Pros and cons of tracker mortgages
Tracker mortgages follow the Bank of England base rate and can be a smart choice for borrowers aware of interest rate movements. Understanding the pros and cons helps you decide if this mortgage type fits your UK home-buying plans.
1. Pros of Tracker Mortgages
- Transparent rate linked to Bank of England base rate
- Often lower initial rates than SVR mortgages
- Flexibility to make overpayments without penalties
“A tracker mortgage offers potential savings in the UK by following the Bank of England base rate, but payments can fluctuate with interest rate changes.”
2. Cons of Tracker Mortgages
- Payments rise if the Bank of England base rate increases
- Less predictability for long-term budgeting
- Not suitable for risk-averse borrowers or those with strict monthly budgets
3. Tips for UK Borrowers Considering Tracker Mortgages
- Monitor base rate forecasts
- Factor potential payment increases into your affordability
- Consider a switch to fixed rate if rates rise significantly
FAQs
Q: Are tracker mortgages cheaper than fixed rates?
A: They can be initially cheaper but may become more expensive if rates rise.
Q: Can I remortgage to a fixed rate from a tracker?
A: Yes, through remortgaging, fees and eligibility apply.