Understanding The Fine Print On Flexible Tracker Mortgages

Getting flexible tracker mortgages, like getting any mortgage product, can be one of the most stressful experiences of a homebuyer's life. Some lenders make their flexible mortgage information crystal clear, but with others it's as clear as mud. And the information behind the headline interest rate is a key component of what your flexible tracker mortgage is going to cost you. With that in mind, here's a brief guide to help you understand the terms lenders use on flexible tracker mortgages.

Loan To Value

With flexible tracker mortgages, as with other mortgages, a key question for lenders is what the value of the property is and how much you want to borrow. That will give them the loan to value, which is the amount you want to borrow as a percentage of the overall value. Some lenders who offer flexible tracker mortgages may only offer an 85 per cent loan to value at the headline interest rate. However, people who want a higher loan to value may find that they pay more than they anticipate for their flexible tracker mortgages. In fact, some providers of flexible tracker mortgages charge a premium for lending over a certain amount. This is typically over 90 per cent. The charge is known as a higher lending charge and this is usually a percentage of the amount over their ideal lending criteria. The higher lending charge insures the lender against the risk that your property won't be worth as much as it is now. It's worth looking out for providers of flexible tracker mortgages who don't charge this fee.

Borrowing Amount

Lenders who provide flexible tracker mortgages will also have a minimum and maximum amount they are prepared to lend. This can vary widely, with common maximum amounts anywhere from £500,000 to £1.5 million. However, if you're looking into flexible tracker mortgages don't assume that you'll automatically get this amount. Instead, providers of flexible tracker mortgages will look at what you and your partner earn. The amount you'll be able to borrow will be a multiple of your salaries. Again, this can vary widely. Some flexible tracker mortgage lenders may lend up to 4.5 times your joint salaries, depending on their criteria.

Insurance And Other Fees

With flexible tracker mortgages, there are a number of fees that borrowers need to look out for. These include arrangement, administration and booking fees, which typically start at £199 and can run to over a thousand pounds depending on the property value. There will also need to be a valuation before you get your flexible tracker mortgage. Costs for a solicitor and conveyancing also need to be considered, as well as buildings insurance and mortgage payment protection insurance. Costs of all these fees vary depending on the property value and the provider, so it's worth shopping around. Some providers of flexible tracker mortgages allow you to add arrangement fees to the mortgage, though this means you will pay interest on the fee for a long time. Stamp duty of up to 4 per cent must also be paid.

For people whose flexible tracker mortgages are on an interest-only basis, mortgage lenders might require them to have an endowment policy or an ISA to make sure they'll be able to repay the loan at the end of the term. Mny lenders also recommend life insurance so that the flexible mortgage can be repaid if the worst should happen.

So, there you have it - a guide to the fine print on flexible tracker mortgages. This should ensure that you're well informed before taking a flexible mortgage deal.

Offset Mortgage Centre

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