A tracker mortgage is a type of variable rate mortgage where the interest rate follows, or “tracks”, an external base rate. In most cases, that’s the Bank of England base rate. Your interest rate will rise or fall in line with any changes to this rate.
For example, if the base rate is 5.25% and your mortgage tracks at 1% above that, you would pay 6.25%. If the base rate changes, your monthly payments change with it.
Tracker mortgages are often chosen by first time buyers who want flexibility or expect interest rates to fall. If you’re exploring your options, our mortgage advisors in Newcastle can help you understand how tracker deals work and whether they suit your situation.
How does a tracker mortgage work?
With a tracker mortgage, your interest rate is made up of two parts: the base rate and a set percentage added on top by the lender. This added percentage stays the same for the length of the tracker period, but the base rate can change at any time.
If the base rate increases, so do your monthly payments. If the base rate drops, your payments go down too. There’s no way to know exactly when this might happen, which means tracker mortgages come with a level of uncertainty.
Most tracker deals last for a set period, such as 2, 3, or 5 years. After that, you usually move onto your lender’s standard variable rate unless you remortgage to a new deal.
Should I choose a tracker mortgage?
Whether a tracker mortgage is right for you depends on your personal situation and how comfortable you are with changing monthly payments. Some people prefer the flexibility that comes with a tracker, especially if it has no early repayment charges.
You may want to consider a tracker mortgage if:
- You believe interest rates will come down in the next few years.
- You want the option to overpay or switch deals without penalty.
- You are happy to take the risk that your payments could go up.
Tracker mortgages are not ideal for everyone. If you need stability in your monthly budget, a fixed-rate mortgage might be a better choice. We can talk you through both options and explain the pros and cons of each one.
What are the risks with tracker mortgages?
The main risk is that your mortgage payments could increase if the base rate rises. In recent years, interest rates have changed multiple times. That means your payments could go up with very little warning.
Some tracker mortgages also have a “collar”, which is a minimum rate. Even if the base rate falls, your interest rate cannot drop below the collar. It’s important to check this when comparing deals.
As a mortgage broker in Newcastle, we will help you understand the full terms of any tracker deal. We’ll explain how rate changes could affect your repayments and whether a tracker mortgage fits with your long-term plans.
Can I switch from a tracker to a fixed rate?
Yes, you can switch from a tracker to a fixed rate by remortgaging. Many people do this when they feel rates are rising, or if they want more certainty in their payments.
Before switching, you should check whether your current tracker deal has early repayment charges. Some tracker products allow you to leave at any time, while others apply penalties during the initial deal period.
If you’re not sure what type of deal you have, our mortgage advisors in Newcastle can check for you and help you decide whether now is the right time to switch.
Speak To A Mortgage Advisor In Newcastle
If you want to learn more about tracker mortgages, our team at newcastlemoneyman is here to help. We’ll explain how these deals work, show you what’s available, and compare them with fixed rates based on your circumstances.
Whether you’re buying your first home, remortgaging, or just weighing up your later life options, speaking to a mortgage advisor in Newcastle can give you a clearer picture of what’s possible.
Date Last Edited: November 7, 2025
