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When it comes to buying a home, you will definitely need to explore all of your home loan or mortgage options. Such a loan is great because it will give you the funds you need to really make one of the most important investments of your life. After all, real estate doesn't come cheap. There are many different kind of mortgages: the key to finding the right one for you is to consider your finances, your real estates needs and wants and to research each type of mortgage. A great mortgage to consider is the UK tracker mortgage. The following includes some basic information regarding this type of mortgage.
A tracker mortgage is one that is linked to the Bank of England's interest rate. Thus, the interest rate of this loan changes depending on the base rate. Though the rates may sometimes be a higher than the Bank of England base rate, they will generally be lower than other variable rates on the market. Such a mortgage is great because when interest rates fall, so too will your payments on your loan. When changes in the interest rate occur, it will affect your tracker mortgage payments in a month's time.
The Bank of England changes their rates in a few ways. Firstly, the Bank's monetary policy committee will take a look at inflation rates and then consider the state of the economy before deciding whether to shift interest rates or keep them at the same rate. You can find UK tracker mortgages of all types: everything from two-year tracker mortgages to ten-year mortgages or those that track for the duration of your loan.
However, the one disadvantage to this kind of mortgage is that rates can also increase. UK tracker mortgages are great if they are taken on when interest rates are low, but they are not so great when interest rates start to rise. This is why it is important to do some careful research into interest rate and stock market rates and into the economy itself. Also, you need to be aware that some lenders will stop tracking if the rates fall below a minimum amount. Thus, it pays to research not only the company or lender you are considering but also their terms and policies. This way, you can be sure that there are no unwelcome surprises regarding your mortgage.