You’ll find that there are all kinds of mortgages available, though determining the best one for you, depends on your circumstances and what you’re looking to achieve. Remember, a mortgage deal is only as good as the situation it is paired up with.
As an example of this, you could get a tracker mortgage but then later realise that you want fixed payments (a fixed-rate mortgage), but you are locked into your deal and can’t switch.
As an open & honest Mortgage Broker in Hull, this is why we always highly recommend that you do your research first or get in touch with a trusted Mortgage Advisor in Hull, to make sure you end up on the right deal.
Feel free to watch our YouTube video from our moneymanTV channel on the topic of “What is a Tracker Mortgage?“
If you are on a tracker mortgage, the interest rate on your mortgage is tracked from the Bank of England base rate, with another percentage is added on from your lender. Your lender cannot choose this additional rate.
For example, the Bank of England base rate could be around 1% and your lender has to put on another set amount of say 1%. This means that depending on the Bank of England percentage, your interest rate will always be a percentage above that.
A Tracker Mortgage is great if at the time of enquiry, the Bank of England’s rate is low. It tends to sit around 0-1%, however, it will rise and decline throughout the course of the year.
During the credit crunch in 2008, the market crashed, which meant that the interest rate shot up.
The highest we saw it go to was around 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 flip side, in March 2020 we had a similar scare in the mortgage market, this time because of the Coronavirus. It played out differently this time though, as the Bank of England 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 even get a tracker mortgage. This was because 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.
Whilst these rises and dips do happen, it’s important to remember the history of the Bank of England base rate too. Whilst they may increase, these rates were once upwards of nearly 17% (during the 70’s), so whilst they may seem high compared to recent years, it could be much worse!
A tracker mortgage has positives and negatives. They heavily rely on the economy, so if the market is performing badly and the Bank of England rate is high, a tracker mortgage is not the best mortgage out there.
If you reverse the situation and perhaps look at if the economy is performing well with a low Bank of England base rate, a tracker mortgage will give you one of the best rates you can get.
There are a wide variety of different mortgage types available to home buyers and homeowners alike. Before making any hasty decisions, it may be beneficial for you to speak with a member of our mortgage advice team.
A trusted mortgage advisor in Hull can help you look 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, you will especially see the benefit of taking mortgage advice. We have been working with mortgages for over 20 years now and know lender criteria front to back, able to match you up with the right deal.
Even if you are looking to Remortgage or Move Home, you will also benefit from Mortgage Advice in Hull. As an experienced Mortgage Broker in Hull, we will work alongside you from the beginning of your process, through until completion and even beyond.