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Are Tracker Mortgages in England better than the U.S. choices?

In England tracker mortgages are a popular option, but are they a better choice than other mortgage types and how do they work? These are mortgages which are similar in some ways to variable rate mortgages but with key important differences. stories point out that with a tracker option the interest on the mortgage amount is set by the Bank of England, and not the lender. Tracker mortgages have an interest rate which follows the monthly bank base rate, which is determined by the Bank of England. The loan contract will set the time frame and the percentage being charged over the base rate set each month. The borrower will see any increases or decreases in the base rate set for the month. The lender also benefits, because they are guaranteed to receive the specified percentage over the base amount each month.

Tracker mortgages are one of the most used options in England, for a number of reasons. With variable rate mortgages the lender is quick to pass on any increases, but the borrower will not usually see any interest rate decreases. Loan securitization allows investors to benefit from tracker mortgages in several ways. Because the interest rate fluctuates but never goes above the base rate plus the additional percentage specified, the borrower has the ability to determine the current payment amount. This helps prevent defaults or foreclosures. Predatory lending practices are also minimized, so that the lender does not put borrowers in severe financial difficulties which can result in a loss of capital to investors.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.