02.12.08 by Andrew Montlake

Base Rate Tracker Trouble

Rumour has it that some lenders are facing some undue attention over their Tracker products, and in particular, the fact that there are some collars attached to them.

Collars are the exact opposite of caps, and therefore prevent the rate falling below a certain level, negating some of the benefit such a tracker product is meant to bring.

There are, however, some very good offering around from lenders who do not have such a collar, most notably offerings from Cheltenham & Gloucester, Woolwich and some interesting offerings for existing customers of Bank of Scotland.

This may well change if we get the expected 1% cut on Thursday as lenders do not want to end up with customers paying no interest whatsoever, so it is a good time to at least reserve a tracker now if your rate is due for renewal in the next 6 months.

Nationwide, who were open about their 2.75% collar, have just released a new tracker product that is currently at 4.99% and has a reduced collar at just 1%, which seems much more reasonable.

I have never had an issue with those lenders who have always been above board with their collars, it is those that are unclear or leave a woolly translation that need to be looked at.

As ever, read the small print as all may not quite be as it seems, and do not be afraid to get it spelled out to you so you are completely aware of all the terms of any deal.

There are some good products around, albeit at lower loan-to-value ratios, with some interesting flexible features attached, free remortgage packages, and drop-locks to ensure the best of both worlds.

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