A tracker mortgage is a type of variable-rate mortgage where the interest rate directly tracks the Bank of England base rate, plus a fixed margin set by the lender. For example, a tracker at "base rate + 1%" would currently sit at whatever the base rate is, plus one percentage point.
Because the rate moves with the base rate, your monthly repayments can go up or down during the term. Some tracker deals run for the full mortgage term, while others apply for a set period, such as 2 or 5 years, before reverting to the lender's standard variable rate.
| Cost | What is it? | What to Consider |
|---|---|---|
| Deposit | The upfront amount you contribute towards the property purchase. | A larger deposit can often unlock a lower tracker margin. |
| Mortgage arrangement fee | A fee charged by some lenders to set up the mortgage. | Check whether it's paid upfront or added to the loan balance. |
| Early repayment charge (ERC) | A charge for leaving the deal early, though many trackers have no or lower ERCs than fixed deals. | Some tracker mortgages allow you to leave penalty-free, which adds flexibility if rates fall elsewhere. |
| Valuation fees | A lender assessment of the property’s value. | Some tracker products include a free valuation as part of the deal. |
| Legal fees | Costs for handling the legal side of buying or remortgaging. | These may include conveyancing, property searches and other legal work. |
| Collar rate | A minimum rate below which your tracker won't fall, even if the base rate drops further. | Check whether your deal has a collar, as this limits how low your repayments could go. |
Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage. The content on this page is for general information purposes only and should not be considered financial, legal or mortgage advice. It does not take into account your individual circumstances, and you should seek independent professional advice before making any financial decisions.
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