We regularly write about why you should switch mortgages, such as in the recent article Is It Worth Remortgaging? We show that if you don’t frequently compare mortgages and switch from the always-expensive standard variable rate (SVR), you could be losing around £500 a year.
However, you don’t just have to choose between switching every few years and languishing on an SVR. You might choose to get a ‘lifetime tracker’ mortgage. These are variable rate mortgages which go up and down with the Bank of England base rate. Typically, they ‘track’ at just over the base rate, e.g. by the base rate plus, say, 0.4%. When the base rate goes up by 0.25%, so does your mortgage, so that it’s always just 0.4% above. It goes down in the same way when the Bank lowers interest rates….