Tracker Rate Loans
When considering a remortgage, the tracker remortgage can offer advantages, depending on the Bank of England Base Rate.
The tracker remortgage is a variable rate loan type which is connected to the base rate, which is set monthly by the Bank of England’s Monetary Policy Committee. The tracker rate is connected to the base rate at a fixed percentage; usually it will be referred to as Base Rate Plus 1 per cent. Therefore, if the base rate at the time is 2 per cent, then the interest rate at that time would be 3 per cent. An advantage to a tracker remortgage is the rate is typically less than the standard rate, at least for the time frame the tracker rate applies. A disadvantage is, when the base rate increases so will your monthly payment. Since rates have been difficult to predict through time, the impact on the monthly budget could be devastating. The tracker rate could be looked at as a risk-reward type rate. It is risky, but can offer some nice benefits. Check with a remortgage specialist to see if a tracker rate remortgage would be best for you.