Tracker and Discounted Mortgages
"Tracker" mortgages are directly linked to the Bank of England Base Rate (BBR). They could be the same as the BBR or they could be a specific amount above or below the BBR - the key point is that they are directly linked to the BBR.
For example:
If a mortgage is a “2 year Base Rate+0.25%” it means the interest rate will be the BBR plus 2.25% for 2 years.
If the BBR was 0.5% then 0.5% + 2.25% = 2.75%.
"Discounted" mortgages are essentially discounts from the banks/building societies own Standard Variable Rates (SVR).
For example:
If a mortgage is a “2 year 1.5% discount” it means the interest rate will be the Mortgage Lender's SVR minus 1.5% for 2 years.
If their SVR was 4.5% then 4.5% - 1.5% = 3.0%.
The interest rate would stay at the same position relative to their SVR whatever happens to the SVR (so if the SVR increased or decreased, so would the interest rate you pay) until the end of the 2 year discount period.
Both Trackers and Discounted mortgages are options to consider if you don't need the security of fixed payments each month and you think the BBR or Lenders' SVR is likely to stay low for the discounted or tracker period and/or there is the chance of the BBR/SVR coming down over the scheme period.
If the BBR/SVR does come down then your rate comes down and so do your payments. Obviously there is never any guarantee the Rate will come down and there is always the chance it will go up, which would increase the interest rate and your mortgage repayments.
Areas covered include: Wetherby, Tadcaster, Boston Spa, Collingham, Kirk Deighton, Leeds, Harrogate, York...
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