What will happen to tracker mortgages

A tracker mortgage can offer more flexibility than a fixed-rate mortgage. This flexibility means being able to pay your mortgage off early by overpaying, changing your mortgage to another lender, or switching to another product with your existing lender, often without having to pay an early repayment charge ERC. If you prefer this kind of flexibility, and can afford higher payments if the base rate rises, a tracker mortgage may appeal to you. Our mortgage interest calculator can help you work out whether you could afford higher payments if the base rate went up.

Financial Services Limited. Financial Services Limited is a wholly-owned subsidiary of Which? Limited and part of the Which? Money Compare is a trading name of Which? Money Compare content is hosted by Which? Limited on behalf of Which? Mortgage calculators. Compare Mortgages. In this article. What is a tracker mortgage? Would a base rate decrease mean lower mortgage payments? Libor-based tracker mortgages How do tracker mortgage payments work?

How long do tracker mortgage deals last? What are 'collars' and 'caps'? Best tracker mortgage rates What happens when your tracker mortgage ends? Tracker mortgages vs fixed-rate mortgages Pros and cons of tracker mortgages Is a tracker mortgage right for me?

If the base rate went up, the interest rate on your tracker mortgage would also rise. Find out more: mortgage interest calculator - see how a rate rise would affect your payments. Initial deal period Average interest rate Number of deals Lifetime 3. Calculate mortgage costs. The lender who originally arranged your tracker mortgage may also have some fixed rate products suitable for you.

More and more mortgage lenders have started to put a collar rate on their tracker mortgages. How do tracker mortgages work? It appears JavaScript is disabled. To get the most out of the website we recommend enabling JavaScript in your browser. A tracker mortgage is a type of home loan where the interest rate charged on the loan tracks that of another publicly available rate, typically the interest rate set by the European Central Bank.

In , the Central Bank of Ireland decided to carry out an industry-wide review of tracker mortgage accounts. Since , we have been identifying and pursuing some lenders in relation to tracker related issues. As such, in December we wrote to all lenders setting out the framework for the Tracker Mortgage Examination.

If the base rate went down to 0. Not all tracker mortgages have collars, and for those that do it is likely to be buried away in the small print. Some tracker mortgage products last for two, three, five or 10 years. Many tracker mortgages come with a set-up fee in the same way fixed rate mortgage deals do. They can be called different names — arrangement fee, product fee or booking fee, for example — can vary in cost, and usually come with the option of being paid upfront or added to the loan.

You should choose a tracker mortgage if there is wiggle-room in your monthly payment budget and you think the Bank of England base rate will either stay the same or fall. So, making a decision to get a tracker mortgage depends on what you think the base rate is going to do in the future. But this is very hard to predict — even the experts get it wrong sometimes. You should only take out a tracker mortgage if you are confident you could afford higher monthly payments if the Bank of England increased the base rate.

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