Do you have a lifetime tracker mortgage? There is a better way…. - July 15, 2016

A large proportion of UK homeowners have historically ‘signed up’ to lifetime tracker mortgages. Many still have these as due to the low interest rates enjoyed over the last few years they have not seen their mortgage increase. Despite yesterday’s decision by the Monetary Policy Committee to keep the base rate at 0.5%, there is a lot of speculation that this may soon be reduced in an attempt to stimulate the economy and maintain consumer confidence in the wake of the recent EU referendum.

It is unlikely that any further reduction in the base rate will have a significant impact on such tracker rates, and it is worth seeking the advice of an established and reputable Mortgage Broker as many of these rates have a ‘floor’ meaning that irrespective of the Bank of England base rate your mortgage rate and payment will not go down further. As we enter a period of uncertainty and unquestionable change these rates can only go up in time. As such we are currently recommending to our clients that they review their existing arrangements to both make savings, but also to protect themselves against potential rate increases in the coming months and years.

What many homeowners are not aware of, is that due to the economic climate when these lifetime tracker rates were taken and the ‘fine print’ relating to rate floors on many of them, a lot of customers are currently paying significantly more on their mortgage than they could be. In recent years the pressure on banks to lend, implementation of Government backed schemes such as help to buy and rising house prices have caused a massive price war between lenders, meaning that fixed rate mortgages are currently about as low as they have ever, and are ever, likely to be. Recently Kevin Brown, Director at One 77 Mortgages, reviewed just such a case for a new client; “This particular client told me that they were on lifetime tracker mortgage that they had taken several years ago. Their property is worth in the region of £250,000 with a mortgage term of approximately twenty years remaining. They were paying an interest rate of just under 4% meaning a monthly mortgage payment of £908. I was able to secure them a fixed rate of 1.64% meaning that they are now paying £735 a month; a saving of approximately 20%, or to put it another way £4,152 over the next two years of this new deal.”

If you would like to speak to one of our brokers to review your mortgage and protection arrangements for free and without obligation please contact a member of the team on 01225 667177 or by emailing info@one77fs.co.uk. We are available seven days a week and outside of normal working hours and have access to a vast array of providers from across the entire UK market, as well as specialist products not available on the High Street, meaning that we will find the right products for you and your circumstances.