Tracker Mortgages Explained

What is a tracker mortgage?

This type of variable rate mortgage moves in line with a chosen interest rate – usually the Bank of England’s base rate rather than your mortgage lender’s standard variable rate (SVR). Your mortgage moves in line with any changes to the base rate i.e. if the base rate increases by 1%, so would your mortgage. However, the amount you pay isn’t the exact value of the base rate – you’ll pay an agreed interest above or below this. This type of mortgage is often more transparent than others as it’s following a rate not controlled by your lender (always check the small print to ensure this is the case). Some tracker mortgages are lifetime deals meaning they won’t come to an end after a set period, while other fixed tracker deals can last about two years.

Pros and cons of tracker mortgages

This type of mortgage is a great option if you believe base rates are going down, but you’ll need to consider that rates can also rise. While your mortgage repayments will go up and down at the same rate as the nominated base rate, you’ll need to be able to afford any increase. Unfortunately, many lenders also set a minimum limit and your rate can’t go below this value. If you choose a lifetime tracker mortgage, you may find this is more cost effective than other deals which have a lower rate for a shorter period of time (such as a discount rate mortgage).


When you come to the end of your introductory offer with a lender, they’ll often automatically switch you to a mortgage in line with their SVR. However, you may wish to look for a better offer elsewhere, and this is when remortgaging should be considered. If you’re already on a tracker mortgage, but want to switch to another, be aware there may be early repayment charges. Sometimes this charge isn’t applied to lifetime trackers or is only applicable for a set period of time. If this is the case, you may find switching to another mortgage could save you money.

When looking to apply for any type of mortgage, getting professional, impartial advice can help you get the best mortgage product for you. Find a trusted mortgage adviser in your local area here.