The rate your client pays is directly linked to movements in the Bank of England Base Rate (BBR). Each time the BBR changes, your client's rate will change in time for their next payment (within one month).
All our tracker rate mortgages are true term products.
This means that if your client's completion date is delayed, their mortgage will still run the full two year deal period
So, if your client completes on 7 August 2014 they will make 24 monthly payments and revert to our Standard Mortgage Rate on 1 September 2016
From 2 May 2014 there are no ERCs on our tracker mortgages meaning your client has even greater flexibility.
If the BBR rate is 0.00% or less during the tracker period, the rate your client will pay will be 0.00% plus the agreed set percentage above the BBR.
This means the rate your client pays will never go below 0.00% plus the additional rate of their tracker mortgage
This is known as the tracker floor
NB: At the end of the tracker rate period your client will automatically move to our Standard Mortgage Rate (SMR). The SMR is currently 4.24% and has no upper limit or cap.
Daily interest is calculated as standard on all our mortgages.
So, each time your client pays off part of their mortgage, whether it's a regular payment or an overpayment, the interest is recalculated the next working day.
This means your client only pays interest on what they owe. It's the fairest way of charging interest and this reduces your client's mortgage balance without the need to wait for the end of the month or even year.
Allowance of £10,000 reset at next anniversary date until the end of the benefit period
In the example above, the original loan amount advanced on 2 July 2014 is £100,000, making the year one overpayment allowance £10,000.
Whatever the balance at the end of year one, the overpayment allowance for year two remains calculated as a percentage of the original balance (£100,000 x 10% = £10,000).
For products reserved on or after 29 May 2013:
If your client overpays by more than their overpayment allowance each year, an Early Repayment Charge will be payable on the amount paid in excess of the overpayment allowance
The annual overpayment allowance is only applicable whilst in the deal period of our fixed and tracker rate mortgages
Tracker rate mortgages reserved after 2 May 2014 have no ERCs so your clients can make unlimited overpayments without incurring a charge
The original loan amount advanced can be found in the original Mortgage Illustration/Offer
Percentage allowance is a calculation of the original loan amount minus any administrative fees.
For products reserved on or before 28 May 2013:
These will remain on the £500 per month overpayment allowance
Any Early Repayment Charges incurred will apply to the entire overpayment amount
Our BMR/SMR, which is currently only available to existing customers reaching the end of their deal period, allows unlimited payments so your client can overpay by as much as they like, when they like.
If your client builds up an overpayment reserve they have the flexibility to reduce their future monthly payments for an agreed period.
Interest will not be charged on any balance increase arising from underpayments until the next capitalisation of the account, annually on 31 December.
Underpayments can only be agreed up to the limit of the overpayment reserve. Borrowers must establish the amount of overpayment reserve on their account and agree a period of underpayment before commencing underpayments.
When underpayments are being agreed it must be determined what payment method is being used and an appropriate adjustment made. Underpayments are not subject to affordability or eligibility checks.