Tracker Rate Mortgages

If you’re comparing mortgages, you may come across tracker rates as an alternative to fixed-rate deals. Tracker mortgages follow interest rate changes, making them appealing in certain conditions. Here we explain what a tracker mortgage is, how they work, the pros and cons, and where to find the best tracker mortgage rates.

What is a tracker mortgage?

It’s a type of home loan where the interest rate follows (or “tracks”) an external benchmark; in the UK, this is usually the Bank of England (BoE) base rate.

Because of this fluid structure, your monthly payments can rise or fall depending on movements in the underlying interest rates.

How does a tracker mortgage work?

Tracker mortgages move in line with the base rate for either a set period or the full term of the mortgage, and your lender sets your rate at a fixed margin (percentage) above the base rate.

If the base rate increases, your mortgage payments will usually go up. If it falls, your payments should decrease. This makes tracker mortgage rates less predictable than fixed-rate deals.

Some tracker mortgages also include features such as:

• Collars: A minimum rate below which your mortgage won’t fall

• Caps: A maximum rate limit (less common)

• No ERCs: No early repayment charges (ERCs) on certain products

Best mortgage rate tracker options

Tracker mortgages are available across a range of different structures, depending on how long you want your deal to follow the base rate:

• Introductory tracker deals: These are typically 2-year, 3-year, or 5-year deals before reverting to the lender’s standard variable rate (SVR).

• Lifetime tracker mortgages: This structure can track the base rate for the entire mortgage term rather than for a fixed period.

• Offset tracker mortgages: It’s possible to link your mortgage to your savings account to reduce the interest you pay.

It’s worth bearing in mind that the further into the future you look, the more potential uncertainty and market unknowns you’ll need to deal with. The right option will depend on how long you want flexibility and your outlook on future interest rate movements.

Compare tracker mortgage rates online

Tracker mortgage rates can fluctuate frequently depending on market conditions and lender appetite, so it’s always worth checking the latest information if you want to compare live tracker mortgage rates.

Using our free tool below, you can see all of the best tracker mortgage deals from lenders throughout the UK. To compare today’s best tracker mortgage rates, simply enter your basic purchase details, like your property value and mortgage amount:

Pros and cons of a tracker mortgage

Tracker mortgages can offer flexibility and potential savings, but they also come with some downsides.

Pros

• Potential of paying a lower tracker rate if interest rates fall

• Often offer lower initial rates compared to fixed-rate mortgages

• Some tracker deals have few or no ERCs

• Flexibility to overpay, remortgage or switch deals

• Transparency around knowing how your rate is calculated

Cons

• Monthly payments can increase if rates rise

• Less certainty compared to fixed-rate mortgages

• Variable mortgage repayments can make budgeting more difficult

• Long-term costs can be unpredictable

• Finding the best tracker mortgage rates is challenging

Compare tracker mortgages online

Get Started Compare Rates

Best tracker mortgage rates from lenders

Several mainstream and niche UK lenders offer tracker mortgage products, although the availability and competitiveness of deals can vary depending on current market conditions.

Here are a few examples of popular lenders that may offer tracker mortgage rates:

However, not all lenders actively promote tracker mortgages at all times; the product line-up can change frequently, and some of the best deals may only be accessible through a broker.

Fixed vs tracker mortgage rates

The main difference between fixed and tracker mortgage rates is how they respond to underlying interest rate changes:

• Fixed-rate mortgages: Your interest rate stays the same for a fixed period, regardless of changes to the base rate, providing certainty over monthly payments.

• Tracker mortgages: Your rate moves in line with the base rate, meaning your payments can rise or fall over time, which can work in your favour or against it.

Tracker mortgage rates are often lower than fixed rates at the outset, particularly when interest rates are high or expected to fall.

However, fixed rates provide stability, which might be preferable if you want predictable monthly costs or if you expect interest rates to rise.

Buy-to-let tracker mortgages

Tracker mortgages are also available for buy-to-let (BTL) properties. Buy-to-let tracker mortgages work in a similar way, with the interest rate tracking the base rate, and buy-to-let lenders will typically assess:

• The expected rental income for the property

• Loan-to-value (LTV) and the size of your deposit

• Your level of experience as a landlord

• Type of property (non-standard constructions can be more complex)

• Your credit file (BTL tracker mortgages can still be possible with bad credit)

Buy-to-let tracker mortgage rates may be slightly higher than those for residential mortgage equivalents, and fewer lenders may offer them than fixed-rate BTL deals.

Why choose Money Helpdesk for your tracker mortgage?

Tracker mortgages can be more complex than fixed-rate deals because your payments can change over time, and lender criteria can vary significantly.

Here’s why borrowers across the UK use Money Helpdesk when comparing tracker mortgage rates and deals:

• Access to advisors with in-depth tracker mortgage experience

• Support comparing tracker and fixed-rate mortgage deals

• Whole-of-market access, including exclusive tracker mortgage rates

• Free initial chat with no obligation to proceed further

If you’d like to compare the latest tracker mortgage rates or discuss whether a tracker mortgage deal suits your situation, you can get started here.