Skip to main content
FOLLOW US:
Call Us Now 01622 831855
MENU
  • Home
  • Our Company
  • Why Indigo?
  • TCF
  • Our Adviser
  • Privacy Notice
  • Contact Us
  • Mortgages
    • Introduction to Mortgages
    • Mortgage Repayment
    • First Time Buyer
    • Remortgaging
    • Buy-to-let
    • Standard Variable Rate Mortgages
    • Fixed Rate Mortgages
    • Tracker Mortgages
    • Cashback Mortgages
    • Offset Mortgages
    • Second Charge Mortgages
    • Self Build Mortgages
  • Protection
    • Family Income Benefit
    • Critical Illnes
    • Private Medical
    • Income Protection
    • Introduction to Life Assurance
  • Business Insurance
    • Introduction to Business Insurance
    • Keyperson
    • Share Protection
    • Income Protection
  • Mortgage Calculators
    • Mortgage Borrow Calculator
    • Mortgage Repayment Calculator
    • Overpayment Calculator
    • Stamp Duty Calculator
  • Research Links
  • Mortgages
    • Introduction to Mortgages
    • Mortgage Repayment
    • First Time Buyer
    • Remortgaging
    • Buy-to-let
    • Standard Variable Rate Mortgages
    • Fixed Rate Mortgages
    • Tracker Mortgages
    • Cashback Mortgages
    • Offset Mortgages
    • Second Charge Mortgages
    • Self Build Mortgages
  • Protection
    • Family Income Benefit
    • Critical Illnes
    • Private Medical
    • Income Protection
    • Introduction to Life Assurance
  • Business Insurance
    • Introduction to Business Insurance
    • Keyperson
    • Share Protection
    • Income Protection
  • Mortgage Calculators
    • Mortgage Borrow Calculator
    • Mortgage Repayment Calculator
    • Overpayment Calculator
    • Stamp Duty Calculator
  • Research Links
  • Home
  • Tracker Mortgages

Tracker Mortgages

With a tracker mortgage, the rate of interest is linked to a specified index, usually the Bank of England’s (BoE) base rate of interest. Whenever the base rate changes, so does the tracker’s interest rate and therefore the borrower’s monthly repayment. Tracker mortgages are a type of ‘variable rate’ mortgages.

When interest rates are low, the borrower’s monthly repayment might be less than it would be on a different type of mortgage, such as a fixed-rate or standard variable rate mortgage. But when interest rates are high, the reverse is true. And as the rate is likely to vary, the borrower can never be sure exactly when or whether their monthly repayment may change.

Although the rate of interest on a tracker mortgage is linked to the Bank of England’s base rate, the actual interest rate charged on the mortgage will be determined by the lender and will usually be higher than the base rate due to the inclusion of the ‘margin’. The interest rate can be calculated as the ‘Base rate’ + ‘margin’. If the base rate is 2%, and the margin is 2%, the interest rate on a tracker mortgage will be 4%. If the base rate increases to 2.5%, the rate of interest will be 4.5% (2.5% base rates plus 2% ‘Margin’).

It is important to note that most ‘tracker’ rate mortgages have a minimum rate that will apply to the loan. For example, the mortgage may have a minimum rate of 3% so even if the base rate went below 1% (with a 2% margin) the mortgage rate wouldn’t decrease below 3%. 

Although some tracker mortgages run for the life of the loan, most last for less than that — between one year and 5 years is not untypical. Once the tracker arrangement finishes, most lenders will switch the mortgage to a standard variable rate of interest.

Call Us Now 07860 445162 Send Us An Enquiry

Indigo Mortgage and Financial Services Ltd is an appointed representative of Quilter Mortgage Planning Limited which is authorised and regulated by the Financial Conduct Authority.

Indigo Mortgage and Financial Services Ltd is registered in England and Wales, Company No: 11707531. Registered Address: 2 Lovelace Close, Abingdon, OX14 1XW.

The guidance and/or information contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.

Some Buy to let mortgages are not regulated by the Financial Conduct Authority.

Approver Quilter Mortgage Planning Limited 02/12/2024.

© Copyright 2025 Mortgage Pro. All Rights Reserved.

Design and Development by Mortgage Pro