What is a Tracker Rate Mortgage?

ATracker rate mortgage has an interest rate set directly against the Band of England base rate. Your interest rate will follow the movement in the Bank of England base rate at an agreed plus or minus margin. (i.e. 1% below or .25% over BOE base rate)

With a tacker rate mortgage they are typically available for a fixed period though some lenders offer them for life time of the loan. The most common tracker rate period is 2 years, though many mortgage lenders now offer 3 year, 5 year and even 10 year track rate mortgages.

If the tracker rate is for a set period of time the mortgage will revert to the lenders standard variable rate at the end of the tracker rate period.


Your home may be repossessed if you do not keep up repayments on your mortgage

Pros and Cons of Tracker Rate Mortgages

Pros

  • Lower interest rate in the first few years then the lenders standard variable
  • You will benefit from all reductions in the Bank of England's base rate

Cons

  • If the Bank of England base rate increases your monthly payments will rise in line with it
  • Early redemption penalties can be onerous and expensive and may apply
  • It is less easy to budget as the interest rate might vary

Do you want No Fee Tracker Rate Mortgage Advice?

For more information on tracker rate mortgage products from our professional mortgage advisors contact us today for mortgage advice. We offer No Fee Mortgage Advice by phone and email to help get you the mortgage that is right for you. Still just browsing rates? Go Direct have many best buy tables so you can quickly see the latest tracker rates available.

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