If you're a first-time buyer, a tracker mortgage could be a good option if rates are low, but it might be wise to find a deal with a cap if you're not sure you could make higher payments should the rates increase.
Yes, it is possible to leave a tracker mortgage early in the UK. But it's vital that you review the terms and conditions of the mortgage agreement, as early repayment charges or exit fees may apply. These charges can vary depending on the specific lender and the terms of the mortgage contract.
What's the difference between a tracker mortgage and a variable mortgage? If you have a variable mortgage, a mortgage lender can set their own variable rate. However, a tracker mortgage normally follows the Bank of England's base rate – which they don't control.
But while a tracker can initially be cheaper than a fixed rate, you are taking on the risk of what the underlying interest rate might do. If it is tracking the base rate and that rises during your mortgage deal, you could end up paying more than if you had opted to fix your rate.
This will depend on the tracker mortgage deal you're offered. For example, with our 2 year tracker rate mortgages, you would be tied in for 2 years. Once this term ends, you will move on to a standard variable rate, unless you decide to switch to a new deal.
If you are on a fixed or tracker rate, you can pay up to 20% of your outstanding balance each year without incurring an Early Repayment Charge. However, if the tracker rate goes up and you continue to repay the same amount as before, it could take longer to pay off your mortgage.
Is there an exit fee? No, you don't have to pay an exit fee when you fully repay your mortgage.
All our tracker mortgage accounts can be switched to any of our fixed-rate mortgage deals without having to pay an early repayment charge.
The current BoE (Bank of England) base interest rate is 4.75%, following the most recent Monetary Policy Committee on 19 December 2024.
(b) the margin/adjustment above the ECB rate, this will stay static throughout the life of the loan. You can make extra mortgage repayments or clear your mortgage earlier than agreed without having to pay any penalties.
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If you are currently on a Fixed rate or Tracker deal you can usually overpay up to 20% of your remaining balance per annum. If you overpay more than 20% of your outstanding balance in any one year, it could result in an early repayment charge.
Two-Year Tracker Mortgages Lead the Surge
Among tracker mortgages, two-year products have seen the most significant growth, with an 87% rise, jumping from over 86,000 in 2021 to more than 160,000 two-year tracker mortgages in 2024.
Fixed rate mortgage - A mortgage with a fixed interest rate for a set period. This means the base rate won't affect your rate when it goes up. But if the base rate goes down, you won't pay any less. Tracker mortgage - Linked to the Base Rate.
In addition to time, you could also save money by using a mortgage broker. Not only are you getting an expert who can find a good deal, but you're getting someone who will assess your needs and make a recommendation that is right for you financially.
While you'd likely be paying less per month today with a tracker, there is always the risk that rates will rise even higher, leaving you gambling if you don't fix. Then, you will be at the mercy of a higher tracker and, therefore, higher mortgage repayments.
You can choose to only pay the interest on your mortgage for 6 months. We'll work out the amount you need to pay based on your interest rate and balance. Your payments will then be fixed at that amount for 6 months. Your mortgage balance won't go down while you're only paying the interest.
For example, when we raise the Bank Rate, banks will usually increase how much they charge their customers on loans and the interest they offer on savings. And the reverse if we lower it. At the moment, Bank Rate is 4.75%. Our next decision will be announced on Thursday 6 February 2025.
A tracker mortgage is where the amount of interest you pay goes up or down, depending on the Bank of England Base Rate. The interest rate 'tracks' against the Base Rate, so it can change throughout your deal. A tracker mortgage will run for a certain term length, such as two or five years.
In accordance with Ofgem regulations, you won't need to pay any exit fees to switch away from your energy supplier within 49 days of your plan ending. Once you receive this notification and you're in the 49-day window, you're free to switch without paying any early exit or cancellation fees.
If you have a fixed rate mortgage or tracker mortgage, most lenders let you overpay 10% of the mortgage balance each year, but some may let you pay more, so check.
There is no actual fee for paying off a variable rate/tracker mortgage early.
Leaving a tracker mortgage works much the same as other mortgage types. This means that you might have to pay an Early Repayment Charge to leave your deal early. Some lenders will let you move onto a fixed rate deal without any repayment charges – always read the details of your deal before applying.