Tracker
remortgages
Tracker rate - a variable rate that is linked to an
underlying
public
interest
rate
(typically
Bank of
England repo
rate) by a
predetermined
margin. For
borrowers
the rate is
often linked
to the
LIBOR.
If you
have owned
your current
property for
a number of
years, the
chances are
that it has
risen in
value;
therefore,
the amount
of loan you
have against
the property
is probably
lower
compared to
the value of
the
property.
This means
that you
could
potentially
have a large
amount of
equity in
the house
that can be
released if
you choose
to
re-mortgage.
If you use
the
re-mortgage
process to
borrow extra
money, the
additional
funds can be
used to pay
for a new
kitchen,
debt
consolidation
or even
paying for a
new car.
Re-mortgaging
has become a
very
straightforward
process and
one of the
main reasons
for
re-mortgaging
is to also
reduce your
monthly
repayments.
The
re-mortgage
process
simply pays
off your
outstanding
mortgage
balance with
your current
lender. You
will then
borrow
either the
same amount
or larger
through your
current
lender or a
new lender
depending on
who you have
chosen as
your
re-mortgage
provider.
Lenders now
offer a
variety of
re-mortgage
products and
one type is
the Tracker
Re-Mortgage.
This is a
mortgage
product that
focuses on
the interest
rate
available.
It is
predominantly
marketed as
a product
that will
follow any
changes made
to the Bank
of England
base rate.
Lenders will
offer you
the facility
to opt for
an interest
rate that is
a set
percentage
above the
base rate.
This will be
agreed prior
to the
completion
of the
mortgage.
The agreed
rate will be
subject to
change in
accordance
with any
fluctuations
of the base
rate. This
means that
tracker
rates can go
up or down
which will
impact the
amount of
your monthly
mortgage
repayments.
The tracker
rates can be
for the
duration of
the mortgage
which
usually
gives you a
lower
interest
rate,
however with
these types
of mortgages
may require
an
arrangement
fee which is
payable to
the lender.
Alternatively,
tracker
rates can be
taken out
for a
limited
period,
usually a
minimum of
two years
which incurs
a slightly
higher
interest
rate than
the lifetime
tracker
rate. Some
lenders will
also require
you to
switch back
to the
variable
tracker rate
after the
fixed period
has ended.
You may also
be required
to pay an
arrangement
fee for the
agreed
tracker
rate.
Whichever
type of
tracker rate
is
purchased,
there may be
Early
Repayment
Charge that
the lender
will impose
on you
should you
repay the
loan earlier
than the
agreed
period.
These
charges are
usually made
up of a
percentage
of the
balance that
has been
repaid or is
currently
outstanding.
Many lenders
are now
offering a
flexible
type of
tracker
re-mortgage.
This type of
mortgage
gives you
the
advantage of
being able
to make
monthly
overpayments.
Therefore,
in addition
to your
monthly
payments,
you can top
them up with
extra
payments
which will
reduce your
outstanding
loan balance
much more
quickly.
They also
offer you
the chance
to take
payment
holidays
should you
need to miss
a monthly
payment due
to various
circumstances.
The
Re-mortgage
market has
seem massive
growth over
the past few
years and
lenders now
have the
ability to
offer very
competitive
deals This
is
beneficial
to you as it
means the
interest
rates on
these
mortgages
have become
lower. It’s
worth
checking
with a
number of
lenders
before you
commit
yourself to
a tracker
re-mortgage.
Most lenders
have
internet
sites that
can be
checked to
compare
lender rates
and it’s
through the
internet
that you
will also be
able to
apply to
re-mortgage.
Lenders
remain open
to branch
and
telephone
applications,
however the
majority of
lenders are
now seeing
increasing
numbers of
online
applications.
Along with
the
re-mortgage
product
itself, you
can also
purchase a
mortgage
protection
policy. This
works in
much the
same way as
an insurance
policy, for
a monthly
fee you will
be entitled
to have your
monthly
mortgage
repayments
made should
you lose
your job
through not
fault of
your own or
become ill.
There are
exclusions
to this type
of policy
and all
terms and
conditions
should be
read fully
before
agreeing to
purchase the
policy.
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