Compare Tracker Mortgages

Where are you in your homebuying journey?

Now answer a few quick questions to help us find the best deals for you.

  • We've partnered with Koodoo to compare mortgage deals across the whole market

  • Answer 8 simple questions to get started

  • See how your current or preferred lender compares

  • Apply direct or through our broker partner

About Tracker Mortgages

Rising and falling in line with the Bank of England base rate, tracker mortgages have been a popular option for UK home buyers while the base rate has remained low.

Think carefully about securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

Information written by Tim Leonard Last updated on 07 March 2022.

What is a tracker mortgage?

A tracker mortgage is a mortgage with an interest rate, which moves in line with the Bank of England base rate. This means your monthly payments could fall if the base rate falls or rise if the base rate rises.

How do tracker mortgages work?

With a tracker mortgage the interest rate is usually set at a percentage above or below the Bank of England base rate and increases or decreases accordingly for the duration of your deal. For instance, you might find the best tracker mortgage for you is set at base rate plus 2%. If the base rate is at 1%, this means your monthly payments will be calculated using an overall interest rate of 3%. Should the base rate then rise to 1.5%, the interest rate on which your mortgage payments are based will rise to 3.5%.

There are tracker mortgages that will follow the base rate for a specific amount of time, such as two years or five years. Alternatively, a lifetime tracker mortgage will track the base rate for the entire term of your mortgage loan.

How to choose the best tracker mortgage for you

Our mortgage comparison tool is the easiest way to search out tracker mortgage rates and a deal that is suitable for your requirements.

Select the reason you’re looking for a mortgage – perhaps you’re a first-time buyer, remortgaging or moving home – and input the value of your property, the size of the mortgage you need, and the terms you might consider. Straight away all the best tracker mortgages, which are both relevant and available to you, will be there for you to select.

The essential information you’ll want to see such as interest rates, APRC, and arrangement fees will be shown too, as well as indication of your monthly repayment based on the criteria you have supplied and the deals that have been found.

The annual percentage rate of charge, or APRC, highlights how much a mortgage will cost you each year in interest rates but also any additional fees, so you can compare mortgages more easily.

Should I get a tracker mortgage?

A tracker mortgage without an early repayment charge could be an option if you’re thinking of moving home or remortgaging in the near future, particularly as the best tracker mortgage rates are often cheaper than fixed-rate mortgages.

However, longer term, a tracker mortgage is only likely to be suitable if your finances are such that they could comfortably absorb any rise in your monthly payments caused by increases in the base rate. If you’re on a tight budget, taking a risk that interest rates will move in your favour is unlikely to be a good idea.

» MORE: Do you need a fixed-rate or variable mortgage?

Types of tracker mortgage

There are two main types of tracker mortgage:

Lifetime tracker mortgages

A lifetime tracker mortgage will run for your entire mortgage term. Its longevity means you won’t need to pay out mortgage arrangement fees every few years to secure a new deal. However, as it’s almost impossible to know what level interest rates might be in 10 or 20 years’ time, lifetime trackers are often considered to involve greater risk than tracker mortgages with a fixed initial period.

Fixed-term tracker mortgages

Other tracker mortgages only track for a set length of time, rather than the whole mortgage term, before switching to the lender’s standard variable rate (SVR). Typically this initial period will be for either two, four or five years, after which you’ll need to remortgage if you don’t want to sit on the SVR.

» COMPARE: Remortgage deals

What are the benefits of tracker mortgages?

The biggest benefit of a tracker mortgage is if interest rates fall your mortgage rate will fall too, reducing your monthly repayments. Furthermore, some lenders will allow you to make overpayments, up to a certain level, on a tracker mortgage without any charges. This means if your monthly repayments fall you could use the money you’re saving to overpay your mortgage, and clear it faster. Not having an early repayment charge also provides flexibility if you’re thinking of moving or remortgaging in the near future.

Are there any disadvantages to tracker mortgages?

If interest rates rise your mortgage rate will rise too, meaning a mortgage that was affordable can suddenly become expensive. It’s important to factor in potential rate rises when working out whether you can afford a mortgage. You can mitigate this by picking a tracker mortgage with a cap – this is a maximum rate you’ll pay. Also watch out for tracker mortgages with collars – this is a minimum interest rate that you must pay, meaning there could be a time when the base rate falls but your monthly payments don’t.

What are the alternatives to a tracker mortgage?

If you want another form of variable rate mortgage, a discount rate mortgage – which tracks at a certain level below the standard variable rate of a lender for a set period of time – could be worth exploring.

» COMPARE: Discount mortgages

Alternatively, if you would prefer certainty over your mortgage payments, a fixed-rate mortgage is an option.

» COMPARE: Fixed-rate mortgages

Tracker Rate Mortgages FAQ

What is a tracker mortgage?

A tracker rate mortgage is a mortgage with an interest rate that moves in line with the Bank of England base rate. The interest rate is set at a percentage above or below Bank base rate and increases or decreases accordingly for the duration of your deal.

Is a tracker mortgage a good idea?

A tracker mortgage could be a good idea if you believe the base rate of interest will fall in the near future, or is currently low and is likely to remain stable. Of course, there can be no guarantees that this will happen, and you would need to make sure you could cope financially if rates increased instead. A tracker mortgage that has no early repayment charges could also prove a good option if you plan to move or remortgage in the not-too-distant future.

What are ‘collars’ and ‘caps’?

A collar on a tracker mortgage is a minimum rate of interest you must pay, regardless of how low the base rate of interest might fall. Some lenders use collars to protect their margins in the event of ultra-low or negative interest rates.

If a tracker mortgage has a cap, this is a maximum rate of interest that can be applied to your mortgage payments. So if the base rate was to soar, a cap offers borrowers some protection against higher repayments.

How long does a tracker mortgage last?

The initial period on a tracker mortgage typically lasts for between two and five years. The exception is if you have a lifetime tracker mortgage, which could run for the duration of your entire mortgage term.

Which type of borrowers are tracker rate mortgages most suited to?

Borrowers who are happy to take some risk on interest rates and who would be able to pay more each month if rates rise are well suited to trackers. If you like stability and knowing how much you’re going to pay each month, then a tracker is not for you.

What fees will I pay for a tracker mortgage?

As with all mortgages, fees differ from product to product, but you should investigate if you have to pay a booking fee, an arrangement fee, valuation fees and legal fees. You’ll also pay a small fee for your lender to transfer the funds to your solicitor. This is known as a CHAPS fee and is usually less than £50.

Are tracker rate mortgages cheaper than fixed rates?

In a low interest rate environment, tracker rates tend to be cheaper than fixed rates, although the difference will be small as there are many competitively priced fixed-rate mortgages on the market today.

What happens if interest rates rise or fall?

If interest rates rise your mortgage rate will rise too. If they fall, your rate will follow suit meaning your monthly repayments will come down.

What happens when my tracker deal comes to an end?

At the end of your tracker deal, you'll move on to your lender's standard variable rate (SVR). You can choose whether to stay on this rate, move to another product with the same lender or remortgage to another provider.

What is the difference between a tracker mortgage and a lifetime tracker?

A tracker mortgage is set at a percentage above (or below – although this is much less likely) the Bank of England base rate for a set period of time. A lifetime tracker is set at a percentage above or below Bank base rate for the full duration of your mortgage term – until the debt is repaid in full.

What is the difference between a tracker rate and a standard variable rate?

A standard variable rate is the lender’s default rate. While it can move in line with the Bank of England base rate, the lender can also increase it or decrease it whenever it chooses.

Should I pay off my tracker mortgage early?

Paying off any mortgage early can be a good idea if your finances allow and you don’t have more expensive debt elsewhere that you should clear first. Whether your mortgage deal has an early repayment charge, and how much you can pay off without incurring such a penalty, should always be considered too.

How can I compare tracker rate mortgages?

You can search and find the tracker rate mortgages that are best suited to you using NerdWallet's mortgage comparison tool.

About the author:

Tim draws on 20 years’ experience at Moneyfacts, Virgin Money and Future to pen articles that always put consumers’ interests first. He has particular expertise in mortgages, pensions and savings. Read more

NerdWallet has selected Koodoo to provide you with this information-only online comparison service on a non-advised basis. NerdWallet will receive a share of the commission that Koodoo earns from the lender or from our partnered broker, Fluent Mortgages.

Koodoo is the trading name of Mortgage Power Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 845978), and is a registered company in England and Wales (company registration number 10978680), with a registered address at Scale Space, 58 Wood Lane, London, W12 7RZ

Fluent Mortgages Ltd is authorised and regulated by the Financial Conduct Authority (FRN 458914), and is a registered company in England and Wales (company registration number 10978680), with a registered address at 102 Rivington House, Chorley, New Road, Horwich, Bolton, BL6 5UE