Tracker mortgages are basically variable rate deals, but instead of the interest rate you pay being based on your chosen lender’s standard variable rate (SVR) it is usually linked to the Bank of England base rate.

The interest rate you pay is a set margin above, or below, the rate that is being tracked and it changes as the rate moves. This means that your monthly mortgage payment increases if the rate being tracked increases.  At the end of the product period, the interest rate will usually revert to the lender’s SVR; this usually results in a higher mortgage payment. There may be initial fees from the lender to set up this type of mortgage and early repayment charges if the loan is redeemed within a certain period of time.