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Variable Rate Mortgages |
A variable rate mortgage follows the Bank of England base rate, and is sometimes referred to as a ‘tracker’ mortgage as it tracks the rises and falls on the base rate, staying a set level above this. An advantage of this is that when the base rate falls you save money, on the other hand a rise in the base rate will see your mortgage repayments rise.
The interest rates on variable mortgages are usually very good compared to other types of mortgage, as the lender knows that no matter what happens to the base rate they will always be earning the same level of interest on the money they lend you. A variable rate mortgage is more risky to the borrower than a fixed rate mortgage as you are exposed to these fluctuations in the interest rates, however there is the potential to save thousands if interest rates remain low for the life of the mortgage. |
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