With a tracker mortgage interest rate deal, your lender will set a starting interest rate, which will then be subject to change according depending on any changes that are made to the Bank of England’s base rate. If you are considering this type of loan, it is advisable to use a tracker mortgage calculator to determine the monthly payable amount you may be expected to pay. A Tracker mortgage calculator may require the following information in order to calculate the size of your monthly repayments:
- The value of your property
- The amount of loan required (or size of deposit you are able to make)
- The preferred length of your mortgage term
Tracker Mortgage Interest Rates
The rate of interest on your loan repayments will increase when the Bank of England base rate rises. However, when the Bank of England base rate falls, so will the interest rate you are expected to pay. The Tracker mortgage is an interest rate deal that is unpredictable, thus making it difficult for you to control your own finances. Because of this, it is important that you are confident in controlling and managing your own finances.
Method of Payment
It is necessary to choose between 2 methods of repayment:
Repayment – this method of repayment requires that you make monthly payments that consist of a pre-arranged monthly sum and the interest you owe for that month.
Interest Only – this method of repayment requires that you make monthly payments of the interest you owe and make separate payments into an ISA to repay the whole of your loan at the end of the term set by your lender.