I dont know what a tracker mortgage is?

Can some one please explain to me in lay mans terms the different ways of paying back a mortgage ie:
What is a fixed rate Mortgage
What is a tracker Mortgage
What is a Flexible Mortgage
What is an off set Mortgage
What is an intrest only Mortgage.....etc

Also
How does Mortgage Interest Rates work?

It all seem very confusing

Fixed- you payment stays at $800 for all 30 years.
Tracker- slang for a loan payment that changes yearly
Flex- mortgage has payments that can be set low to help you afford it
Off-set - a specialty loan where you receive outside money to make payments
Interest only- no money goes to pay down the loan every month.
Interest rates change daily. Just like the rate your bank pays you on your savings account.

It would take hours to fully answer this question. If you are considering purchasing a home you should sit down and talk with a well qualified mortgage broker or bank and as well as a realtor to discuss all these kinds of mortgages and what would be best given your financial situation. Look for someone in the business for 10 years plus.

In short, a fixed rate mortgage keeps the same interest and same payment for the whole term of the loan. Tracker and adjustable are based on the prime or a bank tracker (or schedule). The rate and payment fluctuate as the prime or bank schedule change. So the payments will probably be going up over the next few years. Some of these kind of loans allow you to not pay for a month or pay down the mortgage in large chunks and your payment will reduce.

People choose different methods of payment based on a variety if criteria (how long they plan on being in the home, will the need renovation cash, how their income is generated).

This is one of the biggest decisions you will make in your life. Do not buy anything unless you have a firm grasp on what you are getting involved in. A good realtor and mortgage broker can help you with this and make sure you understand what you are getting involved in. I highly suggest consulting both and doing your homework on both before choosing. If you feel pressured you are working with the wrong people.

sit down, will ya- the bus drivers looking at ya

Ask at a building society or bank.

http://www.shiredirect.com/mortgages/mortgage-types.html

Try this website it tells tells you all the different types of mortages and explains them

Hope this helps

UK's financial watchdog:

http://www.moneymadeclear.fsa.gov.uk/products/mortgages/types/types_of_interest_rate.html

Phoenix - HAHAHAHAHAHAHA I was just about the make a comment like that!

"I'm on the wrong bus"

Types of mortgage interest rate:

* Variable rate mortgage - the rate of the mortgage varies at the discretion of the lender.

* Standard variable rate mortgage - the default variable rate the lender offers to mortgage borrowers with a standard residential mortgage.

* Tracker rate mortgage - a variable rate that is linked to an underlying public interest rate (typically Bank of England repo rate) by a predetermined margin. For borrowers the rate is often linked to the LIBOR.

* Fixed rate mortgage - the interest rate remains constant for a set period; typically for 2, 3, 4, 5 or 10 years. Longer term fixed rates (over 5 years) whilst available, tend to be more expensive and therefore less popular than shorter term fixed rates.

* Discount rate mortgage - where there is reduction in the standard variable rate (e.g. a 2% discount) for a set period; typically 1 to 5 years. Sometimes the rate is stepped (e.g. 3% in year 1, 2% in year 2, 1% in year three).

* Capped rate mortgage - where similar to a fixed rate, the interest the rate cannot rise above the cap but can vary beneath the cap. Sometimes there is a collar associated with this type of rate which imposes a minimum rate. Capped rate are often offered over periods similar to fixed rates, e.g. 2, 3, 4 or 5 years.

Definitions to all these confusing finance terms as well as more reliable information about mortgages in general can be found at:
http://www.simplyfinance.co.uk/Mortgage.html

They have different tabs for all of the terms you listed that give an in depth explanation for each. Also, the different articles posted by the web-site offer insight on how interest rates work, and where to compare and find the best mortgage deal.

Tracker mortgages are a combination of flexible payment options and an interest rate that follows, or tracks, the Bank of England base interest rate. Tracker mortgages can be very beneficial to borrowers, giving more control and financial freedom.

The reason for this is that the borrower has a large element of choice when it comes to making payments. You can pay additional amounts on top of your regular monthly payment. You can pay less than the regular monthly amount, you can even possibly take, what are known as 'payment holidays', all depending on your financial situation at any one time.

This type of mortgage has proved to be very popular with self-employed people or salesmen who work on a commission only. Therefore, are never been sure of how much they will bring home each month.

The tracker mortgage can possibly save a large amount of money in the long term. If you are able to make overpayments to your monthly mortgage bill, either as a one-off lump sum, or on a regular basis. These regular or one of overpayments, mean that your mortgage could be paid off earlier, saving many thousands of pounds in interest payments.

Payment holidays or underpayment months, are usually allowed after some overpayments have been made. This can also be a very useful feature, should you get into some financial difficulty.

Tracker mortgages follow the Bank of England interest rates closely. This means, when the bank lowers its interest rates, then your mortgage interest will also go down. This is true of most mortgages; the difference there is that the change with the tracker mortgage is immediate.

The flip side to this is that if the bank were to raise its interest rates, it would mean that monthly mortgage payments would also increase. Because of this monthly mortgage, payments can go up or down on a regular basis. So you are never 100% sure of how much you will be paying each month. In addition, tracker mortgages have no cap', or limit to how much they interest rates could go up.

Most tracker mortgages are only 'tracker' for part of the life of the loan; this could be anything from one year to ten years. After that, the mortgage will change into a regular or standard variable rate mortgage, known as an SRV.

A tracker mortgage can be a very attractive and useful way of paying a mortgage loan for a relatively short period. You should enquire what the lenders SVR is at the time you take out the mortgage. So that you may compare it to the rate of interest, you will be paying with the tracker. This will give you some idea of what you may have to pay when the mortgage reverts back to a SRV.

The interest rate paid on a SRV is not set by the Bank of England it is set by each mortgage company individually, so could vary considerably from one lender to another.

Tracker mortgages usually offer competitive rates of interest, you should consider if you would be able to make the payments if the interest rate were to be raised. The tracker mortgage is probably best suited to people who have a little like flexibility with how much they may be able to pay each month, should interest rates go down or up.

A good quality tracker mortgage should not have any early repayment charges, which can add up to 3% of the entire value of the loan. This percentage could be a very large figure running into several thousand pounds.

It is essential with tracker mortgages to not just consider the interest rate; you must consider every aspect of the loan such as, what fees may be charged. In addition, if you are paying a lower interest rate, what value the lender may put on the property you are buying. This is because some of these lenders value properties at a lower rate, to limit the amount of money they lend, and therefore the amount of risk they have.

A TRACKER MORTGAGE is one that comes with a guy who will TRACK you down if you dont pay your mortgage on time.

A variable rate mortgage that "tracks" with the Bank of England base rate. Avoid it.

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