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Tracker Mortgages: What Are They and Should You Get One?

Written by, Marija Petkova

Updated June, 24, 2023

Navigating the world of mortgages can feel like navigating a maze, particularly when we delve into the realm of tracker mortgages. In this guide, we’ll explore all aspects of tracker mortgages: what they are, how they work, and their pros and cons.

What is a Tracker Mortgage?

So, you’ve probably asked yourself: “What is a tracker mortgage?” The answer is quite simple. It’s a type of home loan.

But unlike other home loans, the interest rate that you have to pay changes. It doesn’t just change for no reason, though. It changes based on something called the Bank of England’s base rate. When the base rate goes up or down, your mortgage interest rate does the same. The rate you pay is usually the base rate plus a little extra, known as the ‘margin.’

How Does a Tracker Mortgage Work?

The workings of a tracker mortgage are pretty straightforward.

At the start, you often get what’s called an introductory offer. This is like a special deal that lasts for a limited period, usually around two years. During this introductory period, you might enjoy lower interest rates.

But once this period ends, your mortgage rate switches. It usually changes to a ‘lifetime rate.‘ The lifetime rate isn’t for your actual lifetime – it’s just for the remaining duration of your mortgage.

Tracker Mortgage Interest Rate

One of the key features of a tracker mortgage is its changing interest rate. If the Bank of England decides to increase the base rate, your mortgage interest goes up too. This means your mortgage repayments, the amount you have to pay back each month, will also increase.

But the good news is that it works the other way too. If the base rate goes down, your interest rate and your repayments decrease.

How Long Can You Have a Tracker Mortgage?

There’s no one-size-fits-all answer to how long a tracker mortgage lasts. It largely depends on the type of deal you get. Most tracker mortgages last for two to five years. But some can last for your entire mortgage time. These are often called ‘lifetime tracker mortgages‘.

Remember, the term ‘lifetime’ here refers to the life of the mortgage, not your personal lifespan!

Will Your Monthly Payments Change in a Tracker Mortgage?

Yes, they will!

This is because of how a tracker mortgage works. The base rate can change based on economic factors. When it changes, your monthly mortgage payments will also change accordingly. If the base rate goes up, your payments will go up. If it goes down, your payments will go down. So, your monthly payments can change quite often.

This is something you’ll need to prepare for if you’re considering a tracker mortgage.

Tracker vs Variable Rate Mortgage

Even though a tracker mortgage is a kind of variable rate mortgage, they are not exactly the same.

In a tracker mortgage, your interest rate is tied to the base rate set by the Bank of England. If the base rate changes, so does your mortgage interest rate. But with a standard variable rate mortgage, your interest rate is set by your mortgage lender. They have the power to change it whenever they feel like it.

Tracker vs Fixed Rate Mortgage

With a fixed-rate mortgage, the interest rate doesn’t change. It stays the same for a certain period of time. This is different from a tracker mortgage, where the rate can change based on the base rate.

If you like certainty and knowing exactly what you have to pay each month, a fixed-rate mortgage might be a better choice for you.

Advantages of a Tracker Mortgage

One of the main advantages of a tracker mortgage is that it can become cheaper when the base rate is low.

If the base rate falls to record lows, your monthly repayments can also be quite low. This can make it more affordable compared to other types of mortgage, especially in times of low-interest rates.

Disadvantages of a Tracker Mortgage

Like anything else, a tracker mortgage also has its downsides.

If the base rate goes up, your repayments will too. This can make your monthly budget a bit tricky to manage. Plus, some tracker mortgages come with what’s called a ‘collar rate‘. This is like a safety net for the lender, ensuring your rate can’t go below a certain point, even if the base rate drops a lot. So, even if the base rate falls to its lowest point, your mortgage repayments won’t follow suit to the same degree.

Who Typically Gets a Tracker Mortgage?

Tracker mortgages can work well for different types of people.

For instance, if you’re buying a house for the first time and the base rate is low, a tracker mortgage can be a good choice. It can also be a good fit if you’re buying a property to rent out, known as a ‘buy-to-let‘ property. That’s because tracker mortgages often have lower interest rates which can help keep your repayments manageable.


So, a tracker mortgage changes with the base rate – it can go up or down. This can be good if rates are low, but not so good if they go up. Before choosing, think about whether you can handle the uncertainty of changing rates. If you like knowing what you will pay each month, a fixed-rate mortgage might be better. Speak to an expert to help you make the best decision.

Frequently Asked Questions And Their Answers

Is it good to be on a tracker mortgage?

Yes, a tracker mortgage can be beneficial, especially when the base rate is low, potentially leading to cheaper mortgage payments. However, it’s important to remember that if the base rate increases, so will your payments.

Why do people get tracker mortgage?

People choose tracker mortgages for their potential lower rates and flexibility. These mortgages can become cheaper if the base rate falls and often offer the freedom to switch deals without a penalty, offering a balance between affordability and adaptability.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.