Acenden Explains the Pros and Cons of a Tracker Mortgage
Acenden explains the pros and cons of a tracker mortgage If a person takes out a tracker mortgage, the amount which they have to pay each month will be linked with the Bank of Englandâ€™s base rate, and will change as the rate goes up and down. Opting for a tracker mortgage is seen by many as a gamble, as essentially, the borrower is guessing whether the BOE (Bank of England) base rate will rise, stay as it is, or drop. Generally speaking, the tracker is the base rate which is added to a percentage of between one and four. For instance, if a borrow has a mortgage with a base rate plus two percent, and the BOE base rate is currently one percent theyâ€™ll end up paying a total interest rate of three percent on their mortgage. Although most tracker mortgages are linked to the BOE, there are a few lenders who base their tracker mortgage interest on the London Interbank Offered Rate, or LIBOR, which serves as the commercial interest rate which lending institutions base their loan rates on. Many people dislike how uncertain the tracker Acenden Mortgages repayments are, and instead opt for a fixed rate, which offers a stationary repayment amount every month. However, the interest rates on these mortgages are usually higher than those on a tracker. Particularly in terms of starting interest rates, tracker mortgages tend to provide borrowers with a better deal, and this is often what tempts people into applying for them. Provided the interest rates remain low, tracker mortgages can save people a lot of money. For those that want the best of both worlds, some lenders offer their customers a combination of tracker and fixed rate loans, in which the interest will be determined by the BOE base rate for a certain amount of years, after which the mortgage will switch to fixed rates of interest, when the tracker rates begin to rise.,
Published on Jul 11, 2012
For those that want the best of both worlds, some lenders offer their customers a combination of tracker and fixed rate loans, in which the...