Droplock Options (having your cake and eating it?) - 29th January 2009

Author: Jeni Browne Posted on: 29 January 2009

Should I take a fixed rate mortgage or a tracker rate residential mortgage?  If I had £1 for everytime I was asked this right now, I could be retired before the next Bank of England meeting.... now theres a thought.  Droplock is a product which allows you to make the most of a low and potentially reducing base rate now, with the option to switch to a fixed rate mortgage at any time without paying penalties.

So, for those of you who believe that rates are staying low for a bit and then are going to start going up sometime in the next couple of years, this product could be what dreams are made of. 

The rate will track Bank Base Rate and will generally lock you in for a period of time.  However the lender undertakes that if at any time during the lock in period you would like to switch to a fixed rate mortgage, they will let you do this from their suite of products (available at the time) without paying the early repayment charge (albeit you may well need to pay another arrangement/product fee).

The best advice here is that while this feature is extremely enticing, it is worth comparing it to other deals on the market to see how the pricing actually stacks up.