There are now many different types of home loan around and the tracker ones are among the most popular. If you have never come across a mortgage like this before then it is one in which the interest rate tracks the Bank of England’s bank rate and makes sure that the mortgage payments reflect any changes in this.
The following are some of the very good reasons for choosing this sort of loan for your house purchase.
To Get a Low Interest Rate
One of the first things we look for in any type of mortgage is the interest rate. This is because this is the figure which directly affects the amount you pay each month. The lower the interest rate then the less you will pay. This is a very simplistic way of looking at things but it is also pretty accurate. This means that if you want to save money each month then your eyes will probably be instinctively drawn to the tracker mortgages when you are comparing different deals. There are usually good value mortgages, especially when the general interest rates are low. There is the chance of the rate increasing and you would have to pay out higher regular repayments in this case, so you might like to do some research on the current situation before you choose a tracker mortgage.
To Gain Flexibility with the Payments
Another issue which is very important to a lot of homeowners is the flexibility which they will get with their new mortgage. The sort of flexibility which you need can be achieved in a number of ways. Firstly, you might not want to be tied into a deal for a long time, in case you want to move home or switch to a different sort of loan before too long. If that is what you want them a short term tracker which runs for a couple of years will give you the option of changing after this time is up. You will also find that this kind of mortgage often also lets you pay in extra amounts and sometimes even take a break from paying it back.
When You Want to Plan for the Future
When you buy your first house it is a big step and can often mean a huge change in your life. This is a great moment for thinking about the future and making plans. It is also going to be important to you to achieve some sort of financial stability in the beginning. After all, if you are paying a mortgage, bills and other expenses for the first time in your life then you won’t want to be caught out one month. This is why a lot of first time buyers used to be tempted by fixed rate mortgages. These are still popular with some people but the tracker option is also very tempting because it gives you the ability to plan ahead without worrying about losing out if interest rates drop and you are left stuck on a higher rate.
