Home Buyers Guide

Chapter 6: Choosing the Right Mortgage

3. Tracker Mortgage

A tracker mortgage is a mortgage with a variable rate of interest, which tracks the European Central Bank (ECB) base rate. If the ECB drops its rates, so does the mortgage lender. If the rate is increased by the ECB, your mortgage lender will follow suit.

Unfortunately, due to market conditions tracker mortgages have been withdrawn from the market, at least for the time being).

4. Discount Rate Mortgage

Mortgage lenders generally offer an initial discount off their variable rate mortgage. Usually, the discounted rate only applies for the first year and then it reverts to the standard variable rate.

Advantages of a discount rate mortgage:

• Cheap initial rate

• Payments are low at first

• There are some really competitive rates available for first time buyers
Disadvantages of a discount rate mortgage:

• Your payments will automatically increase at the end of the discount rate mortgage, so make sure you’ll be able to pay the higher rate.

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