What is a base rate tracker mortgage?

Base rate tracker mortgages move directly in line with changes in the Bank of England base rate - normally at a level of about 0.5% - 1.0% above the base rate.

Base rate tracker mortgages are only usually available for an introductory period at the start of a mortgage, similar to a fixed or discount rate mortgage. Although you may be able to find a lender which offers a tracker mortgage that lasts for the whole mortgage term. Most mortgage lenders won’t offer them for the full term purely because they’re not very profitable for the mortgage lenders!

The percentage differential between the base rate and base rate tracker will be directly related to your LTV ratio. Basically the lower the LTV ratio - the better your tracker interest rate.

Base rate tracker mortgage offers are usually among the best deals on the market, and as a result you will be faced with redemption penalties if you want to leave the agreement before the end of the introductory period. Also remember that your monthly repayments could be changing on a regular basis, making it difficult to plan financially.