Tracker and Discounted Mortgages
"Tracker" mortgages are directly linked to the Bank of England Base Rate. They could be the same as the Bank of England Base rate and match it at all times, or they could be a specific amount more than or less than the Base Rate and move in line with it - the key point is that they are directly linked to the Bank of England Base Rate.
For example:
If a mortgage is a “2 year Base Rate+0.25%” it means the interest rate will be the Bank of England Base Rate plus 0.25% for 2 years.
If the Bank of England Base Rate was 5% then 5.0% + 0.25% = 5.25%.
"Discounted" mortgages are essentially discounts from the banks/building societies own Standard Variable Rates (SVR), and normally for a specified period of time.
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 6.5% then 6.5% - 1.5% = 5.0%.
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. It would then revert to the actual SVR.
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 Bank of England Base Rate or Lenders' SVR is likely to stay low for the discounted or tracker period and/or there is the chance of the Bank of England Base Rate/SVR coming down over the period.
If the Base Rate/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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