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Tracker mortgages

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What's a tracker mortgage?

They’re a type of variable rate mortgage usually set at a certain percentage above the Bank of England (BoE) base rate. Although buy-to-let and commercial trackers may follow a different financial indicator, such as SONIA (sterling overnight index average).

As with all variable mortgages, the interest rate can rise or fall during your deal period. Trackers are often cheaper during the initial period of a fixed-rate mortgage.

That said, it’s easier to predict tracker rate changes than changes in other variable rate mortgages, as they only change when the base rate - or other financial indicator - does, rather than at the lender’s discretion.

How are tracker mortgages different from other mortgages?

Tracker mortgage vs fixed-rate mortgages:

Tracker mortgages are mainly different to fixed-rate mortgages because the interest rate can change during the deal term.

With a fixed-rate mortgage you’re paying for the security that the interest rate won't change during the deal period. This is a safer option for those on a strict budget, even though fixed rates are usually set higher than tracker rates.

Tracker mortgage vs standard variable rate (SVR):

Tracker mortgages also differ from other types of variable rate mortgages, such as a standard variable rate (SVR), as they follow an external indicator like the base rate. This means lender’s don’t have full control over changes.

On the other hand, each lender has an SVR, which is set purely at their discretion. Although they may be influenced by base rate changes and other external financial factors.

Tracker mortgage vs discount rate mortgages:

A discount rate mortgage works similarly to a tracker, but instead of following an external indicator, it follows the lender’s SVR and provides an initial discount off the lender's SVR for a set period of time.

Tracker mortgages with Mojo

We have partnered with an expert broker to help borrowers save on their biggest monthly expense.

Just answer some questions about your situation and let Mojo's expert advisors guide you to a mortgage tailored to your needs. And the best part of it all is, it’s completely free (yes, really!).

With access to lenders across the whole of the market, Mojo advisors strive to save you money and find your best tracker mortgage rate.

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How do tracker mortgages work?

Tracker mortgages are set at a percentage - decided by the lender - above the BoE base rate. This means, when the base rate changes, your repayments therefore go up or down in line with those changes.

For example:

  • Base rate 5.25%* - your lender sets the rate at 2% above the base rate - you pay 7.25%
  • Base rate changes to 5.5% - you now pay 7.5%
  • Base rate changes to 3% - you now pay 5%

*For demonstration purposes only but correct at the time of writing

Like all mortgages, the interest rate you’re offered for your tracker mortgage depends on the size of your deposit and your personal circumstances.

How often do tracker mortgage rates change?

The BoE Monetary Policy Committee (MPC) meets 8 times per year to set the base rate, but can have additional meetings if they feel it's necessary.

This means that your interest rates - and therefore repayments - could change 8 times per year or more. Staying up to date with UK financial news can help you to plan ahead - usually the base rate increases when inflation is high.

Here's a history of the recent base rate changes in the past year:

Date changed Rate
03 Aug 23
5.25%
22 Jun 23
5.00%
11 May 23
4.25%
02 Feb 23
4.00%

What does an interest-rate collar and cap mean?

Interest-rate collar:

Also known as an interest rate floor, it's the rate in which the interest on your mortgage can't fall below - even if the base rate does.

For example, if your lender has set a collar rate at 1.5% and the base rate falls to 1%, the interest you pay on your mortgage will still be 1.5%.

Not all tracker mortgages have a collar rate, so check with your lender first.

Interest-rate cap:

Also known as a ceiling, a cap is rare to find on a tracker, but can be invaluable. It’s the exact opposite of a floor (or collar). Your interest rate can never rise above the cap, even if the financial indicator does.

So, if you have a deal set at 2% above the base rate, but capped at 5%, even if the base rate rose above 5%, you wouldn’t pay more than that.

What happens if I want to end a tracker mortgage early?

If you’re within a set deal period, most lenders charge early repayment charges (ERCs) to leave before the end date. Although this doesn’t usually apply to lifetime trackers.

How much ERCs you'll be charged depend on how long is left on your deal. Expect to pay a lot more if you have 9 years left on a deal than if you only have 1.

Either way, it can cost thousands to leave a deal early, and sometimes this outweighs the benefits of remortgaging to a cheaper rate.

A mortgage broker, like Mojo Mortgages, can help you understand your options and which one is best for your needs.

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What are the pros and cons of a tracker mortgage?

Tick

Advantages of tracker mortgages:

  • They often have cheaper interest rates at the beginning of the deal compared to fixed rate deals
  • There's more certainty than other variable rates due to the rate following an external indicator
  • If the financial indicator falls, you’ll benefit from lower repayments
  • Some lenders may allow unlimited overpayments - especially if it’s a lifetime deal
  • Some lenders might allow you to switch to a fixed-rate mortgage for free if the base rate rises a lot
  • If you can find a deal with a cap, you’ll benefit from knowing your interest won’t rise beyond a certain level
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Disadvantages of tracker mortgages:

  • The rate could change several times a year, meaning your repayments could change dramatically and become unaffordable
  • You have to be prepared in case your rate increases, so they're harder to budget for than fixed-rate deals
  • You may have to pay ERCs to leave a deal before it ends
  • If the deal has a floor, your interest rate can't fall below a certain level, so you may not benefit when the base rate falls below a certain level

What our expert says

"Tracker mortgages can be a smart choice if you’re comfortable with a bit of movement in your monthly payments as they rise and fall in line with the Bank of England base rate, so when rates drop, you benefit too"

Ashlyn Trojnacki - Mortgage expert
Mortgage Expert Confused.com logo

Mojo's customer says:

“The whole experience from start to finish was very smooth and quick! We provided the information they asked and was then just kept in the loop with what was happening with the application without having to chase, would definitely recommend as the whole service was free also!”

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“Very friendly and informative adviser who explained every option clearly and there was no pressure. We will definitely use them again.”

- Mojo Mortgages customer ()

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Learn about different mortgage types

Mortgages icon

Mortgages

Are a type of loan used to buy a property. The mortgage is secured against the value of the property. <style> </style>

First time buyers mortgages icon

First-time buyer

Are designed to help give you that first step on the housing ladder. <style> </style>

Remortgage icon

Remortgage

Are for when your current mortgage deal comes to an end.

Mortgages icon

Interest-only mortgages

Are where you only pay back the interest each month. When your mortgage term comes to an end, you still owe exactly what you borrowed at the start.

Mortgages icon

Buy-to-let Mortgages

Aren't that different from a regular mortgage. But there are some important differences.

Tips & guides on tracker mortgages

APRC explained

When looking at mortgages, you’re likely to come across your fair share of jargon and acronyms. Another one to add into the mix is APRC.

The Bank of England base rate explained

The Bank of England base rate can affect how much interest you pay on your mortgage. Here’s how it works.

Overpaying your mortgage?

Mortgage overpayments are when you pay more than your normal monthly mortgage payment. This lets that you pay your mortgage off faster and you could pay less interest overall.

Loan to value explained

What is loan-to-value (LTV) and what does it mean for buying a house?

See all mortgage guides

Need more help?

How long do tracker mortgages last?

You can typically take a tracker mortgage deal to suit your needs. 2, 3 or 5 years are the most common term lengths, but it’s possible to get 10 year terms and even lifetime tracker mortgages.

Once your deal ends, you’ll fall onto the lender’s default interest rate, the SVR. This is usually higher than fixed-rate and other variable rate deals, so you may want to look at remortgaging to avoid the SVR.

Are you tied into a tracker mortgage?

Most tracker deals have a set length, meaning there are likely to be early repayment charges if you leave before the deal term ends.

Some lenders may let you switch to one of their fixed-rate products without paying fees if your tracker rate suddenly increased by a lot. This is not common though, most people will end up paying ERCs.

Can I move my tracker mortgage if I move house?

Some trackers are portable - meaning you can take them with you when you move. This is laid out in your terms and conditions, so if it’s important to you, be sure to ask before you commit.

Keep in mind that porting your mortgage to a new property is not always the cheapest option and you may get a more competitive mortgage from another lender - especially if you’re looking to increase your borrowing.

Page last reviewed: 31 October 2025

Reviewed by: Ashlyn Trojnacki

YOU SHOULD THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME/PROPERTY. YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. 

The Financial Conduct Authority does not regulate mortgages for commercial or investment buy-to-let properties. 

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