Choosing the right mortgage is all about selecting the option that suits you the most. I have often noticed that the life time tracker mortgage which could be suitable to a lot more people is not being considered because of the lack of knowledge. This article aims at throwing more light on life time mortgages.
While it is a common practice for many homeowners to periodically remortgage the property say at the end of a fixed interest term etc there is a good percentage of homeowners who rather leave the mortgage where it is and continue to repay the mortgage thought it has moved to a standard variable rate. The reasons for doing so could be very varied but some of the popular reasons include:
Smaller loan size that may not justify the time and money spent in re mortgaging the property every now and then
Need the flexibility be able to sell the property or raise finance in the future and hence don't want to be tied to a specific mortgage for say 2 3 or 5 years
Personal preference to leave the mortgage alone and not keep disturbing it periodically
For such customers a life time tracker mortgage could be a good option.
A life time mortgage unlike a fixed mortgage or a tracker mortgage does not have 2 rates. A 2 year fixed / tracker mortgage for instance will have an initial rate during the first 2 years and followed by the standard variable rate for the rest of the term in a life time tracker there will be only 1 rate for the entire mortgage term and this will be track the bank of England rate throughout the term of the mortgage.
There will be a tie in to this product but usually not for very long. The tie in period usually varies from 6 months to 3 years after which you are free to remortgage however given that you are not on a standard variable rate but a tracker rate means the rate itself will not force you to remortgage and hence you have the freedom to do so if required.
Lifetime tracker usually comes with a lower arrangement fee than other products such as Fixed rates It is not uncommon to have a life time tracker with no fees and sometime free valuation and free legal (for remortgage) as well
Unlike a variable rate where the bank has a choice and control of the rate in a life time tracker they have to change the rate in line with the Base rate and have no control or say over this in that aspect such an interest type is better than a standard variable rate.
Your home may be repossessed if you do
not keep up repayments on your mortgage.
Sekkappan Alagu trading as Nachu Finance is an
appointed representative of The Whitechurch Network
Limited which is authorised and regulated by the
Financial Services Authority. We do not usually
charge a fee for mortgage advice. However you
do have the option to pay a fee of 0.80% of the
loan value and The Financial Services Authority
may not regulate all products or services on this
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