In this brief guide, we are going to cover the Halifax tracker mortgage.
Do Halifax Do tracker mortgages?
Yes, Halifax offers a Halifax tracker mortgage as part of its mortgage products.
What is a Halifax tracker mortgage?
The Halifax tracker mortgage is a type of variable rate mortgage: their interest rates can go up and down, they usually have no early repayment fees but your Halifax tracker mortgage may have these fees.
The Halifax tracker mortgage follows the bank of England base rate.
Tracker rate mortgages do not match the bank of England base rate exactly but rather they are the basis on which a margin is placed e.g England base rate plus 1.5% = tracker rate or it could be the England base rate – 1.5%.
You can get a Halifax tracker mortgage for 1- 5 years or you may be able to get a lifetime tracker rate mortgage from Halifax or another mortgage lender which will last the whole term of your mortgage.
In most cases a mortgage lender will offer a tracker rate mortgage as an introductory offer for the first 3-5 years of the mortgage after which the interest rate will switch to a more expensive standard variable rate or another tracker rate with a higher margin. This is likely the case with the Halifax tracker mortgage.
Tracker rate mortgages can have a positive or negative margin. This means they can be lower or higher than the base rate which they follow. Tracker mortgages which have a negative margin may also come with a collar rate which is a minimum rate to which the mortgage lender will allow the interest rate on your mortgage to fall.
Advantages of the Halifax tracker mortgage
Tracker mortgages are good if interest rates fall as these would reduce your monthly mortgage repayments.
Arrangement fees for a tracker rate mortgage tend to be quite low and this may be the case with the Halifax tracker mortgage.
Most mortgage lenders will offer a switch and fix feature which essentially allows you to switch to a fixed rate mortgage in their mortgage product suite if the tracker rate goes up to a level you can cope with. They will allow you to switch at no cost to you. You should check with your mortgage broker or the Halifax mortgage advisor if the Halifax tracker mortgage does this.
Disadvantages of a Halifax tracker mortgage
If interest rates rise you could find yourself in a position where you can’t afford your monthly mortgage repayments.
Due to how favourable tracker rate mortgages are they will usually have high costs to switch from. E.g the early repayment fees
Tracker rate mortgages with collar rates will not allow you to fully benefit if interest rates fall
Tracker mortgages might not allow you to overpay on the mortgage as well. This means they will prevent you from benefitting in any interest charge savings overpayment might provide you. You should check to see if these advantages apply to the Halifax tracker mortgage by asking your mortgage broker or the Halifax mortgage advisor.
How to apply for a Halifax tracker mortgage?
To apply for a Halifax tracker mortgage you may want to first contact a mortgage broker.
Mortgage brokers are important as they can access tracker mortgage products from across the whole of the market in some cases. This could be over 1,000 tracker mortgage products. This may have some advantages than going directly to a mortgage lender such as Halifax.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which Halifax tracker mortgage products may be suitable for you, if any.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously. Once you have found a home you want to buy the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your Halifax tracker mortgage with the help of a conveyancer.
In this brief guide, we covered the Halifax tracker mortgage. If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.