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Mortgage glossary

Lifetime tracker mortgages

A lifetime tracker mortgage is a loan secured against the value of a home whose costs are guaranteed to stay within a fixed percentage of the UK’s underlying cost of borrowing.

The underlying cost of borrowing in the UK is set by the Bank of England’s Monetary Policy Committee (MPC). By taking out a lifetime tracker mortgage mortgage-holders can be sure that they are never paying too much for their mortgage.

However, in the short term a lifetime tracker mortgage will very rarely offer the best value. A discounted rate mortgage is generally cheaper - although, after an initial period the discount expires and the cost will rise (generally to a level above that of a lifetime tracker).

A lifetime tracker mortgage offers no protection should the MPC decide to increase interest rates, unlike a fixed or capped rate deal. However, if the MPC decides to cut rates instead, a fixed or capped deal could see you being charged more than you need.


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