Tracker mortgages

What is a tracker mortgage?

A tracker mortgage is a specific type of variable rate mortgage. The interest rate for a tracker mortgage normally changes in line with the Bank of England’s base rate changes. As this can happen up to eight times each year, your interest rate and monthly repayments could change regularly.

What’s the difference between fixed-rate and tracker mortgages?

• With a fixed-rate mortgage, your interest rate is fixed for a set period of time. This means your monthly repayments stay the same for the duration of the mortgage.
• With a tracker mortgage, your interest rate and monthly repayments usually change every time there’s a Bank of England base rate change. This means your interest rate can go up and down.

What’s the difference between variable and tracker mortgages?

• Whether you opt for a standard variable rate mortgage or a tracker mortgage, you won’t be locking in a fixed interest rate. This means your interest rate and monthly repayments are likely to change during your mortgage term.
• If you have a standard variable rate mortgage, the lender sets the rate that you receive. But with a tracker mortgage, it’s normally the Bank of England’s base rate that affects the rate you receive.

What are the benefits and disadvantages of tracker mortgages?

Potential benefits of tracker mortgages

• Tracker mortgages tend to come with lower introductory rates than fixed-rate mortgages. This means your monthly repayments could be more affordable to begin with.
• If the base rate falls during the mortgage term, your interest rate and monthly costs are likely to fall. But with a fixed-rate mortgage, you could be stuck paying a higher rate for the remainder of your mortgage term.

Potential disadvantages of tracker mortgages

• If the Bank of England’s base rate goes up, it’s likely your repayments will too. This can make it difficult to create a set financial plan for the future. And if the base rate rises significantly, you might find your mortgage repayments become difficult to afford.
• If you think you would struggle with the impact of big rate changes, you might find a fixed-rate mortgage is easier to manage. But it’s always best to discuss your options with an expert, to help you decide what's right for you.

Could a tracker mortgage work for you?

The decision to take out a tracker mortgage depends on your personal situation. You should also consider the state of the mortgage market and the economy. That’s why it’s so important to get expert advice from a trusted mortgage broker.

When interest rates are rising, some homeowners choose a fixed-rate mortgage for added peace of mind. That’s because even if the Bank of England base rate changes, their monthly costs will stay the same.

If interest rates are falling, some homeowners might see a tracker mortgage as a better option. That’s because their monthly payments are likely to fall if the base rate falls further.

Explore your options with Saga Mortgages

It’s quick and easy to start your tracker mortgage search with Saga Mortgages. We partner with Tembo – an award-winning digital mortgage broker – who offer expert advice and access to hundreds of mortgage deals. This could save you money and boost your budget.

If you want to see what’s possible, simply register your details here and answer a few questions. In a few minutes, you'll see personalised examples of products, costs and interest rates, and have the chance to discuss things further with a friendly advisor.