Capped tracker mortgages offers by lenders
11/03/2009
Mortgage lenders, the Woolwich and Coventry Building Society have both launched new tracker mortgages that guarantee that interest rates will not exceed a certain level, even if the base rate increases beyond this cap.
The Woolwich’s lifetime tracker mortgage charges rates of 2.99% above the base rate. For the first three years of the deal, the interest rate is capped at 5.99%. The version offered by Coventry Building Society caps the interest rate at 4.99%. Therefore, however high the Bank of England base rate goes in the first three years, the highest the repayments would reach for an average 25-year, £150,000 mortgage are £966 for the Woolwich mortgage and £876 for the Coventry mortgage. At the current base rate, repayments would be £750.
This type of mortgage can offer people a period of stability during which they can plan their finances around a guaranteed maximum mortgage repayments, which may be beneficial to people looking to recover from the recession.
However, cheaper tracker mortgages are available, such as First Direct’s lifetime tracker at 2.39% above base rate, which translates as repayments totalling £703 for an average mortgage.
HSBC also has a two-year fixed rate mortgage, fixing rates at 2.89%. This has a fee of £1,499 and is available to people with a 40% deposit.
The Woolwich’s lifetime tracker mortgage charges rates of 2.99% above the base rate. For the first three years of the deal, the interest rate is capped at 5.99%. The version offered by Coventry Building Society caps the interest rate at 4.99%. Therefore, however high the Bank of England base rate goes in the first three years, the highest the repayments would reach for an average 25-year, £150,000 mortgage are £966 for the Woolwich mortgage and £876 for the Coventry mortgage. At the current base rate, repayments would be £750.
This type of mortgage can offer people a period of stability during which they can plan their finances around a guaranteed maximum mortgage repayments, which may be beneficial to people looking to recover from the recession.
However, cheaper tracker mortgages are available, such as First Direct’s lifetime tracker at 2.39% above base rate, which translates as repayments totalling £703 for an average mortgage.
HSBC also has a two-year fixed rate mortgage, fixing rates at 2.89%. This has a fee of £1,499 and is available to people with a 40% deposit.
