Tracker Mortgages – Are They Worth The Gamble?

Taking on a tracker mortgage depends on how you think the market is likely to change over the next few years. While none of us can foretell the future, you can use advice and research to make an informed opinion.

The current climate

For the past few years, the base rate has been set at a relatively low figure. This has kept mortgage rates particularly low, and has given the housing market a substantial boost. Some experts think it is bound to rise in the near future, although many fears of a resulting crash in the housing market have already proved groundless.

If you are fairly confident that the base rate will be kept low by the exchequer, you may want to take a gamble with a tracker mortgage. As with many of the other ‘discounted’ and ‘special offer’ mortgages, there may be heavy penalties incurred if you want to change mortgage or lender before the tie in term has expired, though trackers do tend to have less penalties than others.

The tracker type of borrower

A sound suggestion is to consider your own financial situation, rather than trying to predict the market. If you are fairly confident that you will be able to handle fluctuations in your mortgage repayments, then a tracker can be a worthwhile risk.

The Bank of England monitors the economic situation, and assesses financial forecasts. It will then usually adjust the interest rate accordingly – lowering the rate to encourage the market or raising it to moderate inflation. You can check the minutes of monthly meetings and find more information at www.bankofengland.co.uk

Joe Kenny writes for the UK Loans Store where you will find information and reviews of the latest loans and offer more information on secured loans and other loan topics available on site.
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