First of all, how many different types of mortgages are there?
There are lots of different mortgages available, each of them being unique with their own advantages and disadvantages. In this article, we are going to focus on the tracker mortgage and why it could be the best option for you. Remember, a mortgage deal is only as good as the situation it is paired up with. For example, you could get a tracker mortgage but then further down the line realise that you want fixed payments (a fixed-rate mortgage), but it’s too late to switch as you are locked into a deal. As a Mortgage Broker in Hull, this is why we always recommend in doing your research first or get Mortgage Advice in Hull in case you end up on the wrong deal.
If you would rather watch our YouTube video feel free to hop over to our moneymanTV channel and watch “What is a Tracker Mortgage?“, or you can easily catch it below:
Anyway, what is a tracker mortgage? If you have a tracker mortgage, your interest rate is tracked from the Bank of England’s base rate and then another percentage is usually added on top from your lender. Your lender cannot choose this rate that goes on top, it’s an external rate that they must follow. For example, the Bank of England’s base rate could be 1% and your lender has to put on another set amount of say 1%. So, depending on the Bank of England’s percentage, your interest rate will always be another percentage above that.
A Tracker Mortgage is great if the Bank of England’s rate is low, it normally sits around 0-1%, however, it will rise and decline throughout the year. During the credit crunch in 2008, the market crashed, so the interest rate shot up. The highest it went up to was about 5%. If you also consider the percentage that your lender will add on top, you could’ve had 6% interest on your monthly mortgage payments.
On the other hand, in March 2020 the mortgage market got a similar scare, this time it was the Coronavirus. It was reversed this time though, the Bank of Englands rate decreased massively, it went down to 0.1%. If you were on a tracker mortgage during this time, it was likely that you were on a 1.1% interest rate. Of course, during this period, you couldn’t pick up a tracker mortgage as the rates would’ve been too good to be true and at the end of the day, lenders are trying to make money and not lose it. 6 months later (as of September 2020), it’s still difficult to get a tracker mortgage.
The Tracker mortgage has its pros and cons. They heavily rely on the economy, so if the market is performing badly and the Bank of England’s rate is high, a tracker mortgage is not the best mortgage out there. Whereas, if you flip the situation on its head and the economy is performing well with the Bank of England’s rate low, a tracker mortgage will give you one of the best rates you can get.
There are lots of different types of mortgages available to you in Hull, it’s just finding the perfect one for you. Before jumping into any deals, it could be within your best interests to speak to a Mortgage Advisor in Hull about your mortgage options. They will help you shop around for deals, trying to find you the most competitive one for your personal and financial situation.
If you are a First Time Buyer in Hull, our service will prove highly beneficial, we have been working within the mortgage industry for over 20 years now and know all of the different types of mortgages and which ones will benefit you as a Frist Time Buyer the most.
Even if you are looking to Remortgage or Move Home, we think that you will value of Mortgage Advice service in Hull. As an experienced Mortgage Broker in Hull, we will work with you from start to finish and provide a helping hand throughout the whole mortgage process.