Mortgages
Tracker Mortgages
Tracker mortgages explained: Bank Rate plus a fixed margin, two-year, five-year and lifetime trackers, collars, switch-to-fix options and tracker vs fixed.
- Published
- 11 Sep 2026
- Last reviewed
- 1 Oct 2026
- Reading time
- 7 min
Expert advice on Tracker Mortgages
Speak to a Mortgage Lane adviser about your options.
In short
A tracker mortgage is a variable rate mortgage whose interest rate tracks the Bank of England's Bank Rate at a fixed margin above it, so when Bank Rate rises or falls, the mortgage rate moves by the same amount, automatically and from a set date, for the tracker period.
What is a tracker mortgage?
A tracker mortgage sets its rate as Bank Rate plus a fixed margin, so the lender cannot move the rate at its discretion within the tracker period: only a change in Bank Rate moves it. That makes a tracker rate mortgage more transparent than a lender's standard variable rate or a discounted rate. Tracker periods commonly run for two or five years before reverting to the standard variable rate, and some trackers run for the life of the mortgage. In our experience some trackers carry no early repayment charge, and some allow a switch to a fixed rate without charge; both vary by lender. A tracker on your own home is regulated residential lending under the Financial Conduct Authority's MCOB rules, and because its rate can rise, it is stress-tested against rate rises when the lender assesses affordability. Bank Rate is set by the Monetary Policy Committee at scheduled meetings (Bank of England).
Tracker mortgage rates
A tracker mortgage rate is Bank Rate plus a margin the lender sets for the loan-to-value tier and the product: the margin is fixed for the tracker period and the pay rate moves with Bank Rate. Some trackers carry a collar (a minimum rate) and some a cap (a maximum). Trackers are compared on the margin, any collar, the early repayment terms, the switch-to-fix option and the period, and against a fix, on the borrower's view of Bank Rate over the period.
If you are considering a tracker, get in touch with your loan and your view on rates. We show you the payment today and after a rise, and the fix you would switch to if your view changed.
A collar at the starting pay rate would stop a 0.5 point fall in Bank Rate reaching the borrower, a fall worth £60.94 a month on an illustrative £200,000 loan at 5.2%, while every rise still passes through.
Tracker mortgage criteria
Tracker terms are set product by product: the period, any collar, the early repayment charges and the right to switch to a fixed rate all vary by lender. In our experience some trackers carry no early repayment charge, while others carry charges for part of the tracker period, for example 2% in year one and 1% in year two. The offer sets out the terms that apply, and we check them before you choose.
Tracker mortgage criteria
| Criterion | Value |
|---|---|
| Rate basis | Bank Rate plus a fixed margin for the tracker period |
| Period | Commonly two or five years, or lifetime; the periods available vary by lender and change with the market |
| Reversion | To the lender's standard variable rate at the end of the period (lifetime trackers do not revert) |
| Collar and cap | Some products carry a collar (a minimum rate) or a cap (a maximum); both are set out in the offer and checked before choosing |
| Early repayment charges | Varies by lender and product: in our experience some trackers carry none, while others charge, for example, 2% in year one and 1% in year two |
| Switch to fix | Varies by lender: some allow a switch to their fixed rates without charge, others apply the early repayment charge; checked product by product |
| Affordability | Standard residential affordability with the MCOB stress test applied against rate rises; the exemption for rates fixed for five years or more does not apply |
| Overpayments | No charge to overpay where no early repayment charge applies; otherwise within the product's allowance |
| Purpose | Purchase, remortgage, product transfer; residential and buy to let |
| Buy to let | Trackers stressed with a loading on the rental coverage test; five-year fixes commonly stressed at a lower rate (on the cases we arrange, around 4.5% against around 5.5% on two-year fixes) |
Types of tracker mortgage
Two-year tracker mortgages
A two-year tracker follows Bank Rate for two years and then reverts to the standard variable rate. Borrowers choose it when they expect Bank Rate to fall over the next two years or plan to move or remortgage soon. The margin is fixed for the two years, and in our experience some two-year trackers carry no early repayment charge.
Get in touch for a two-year tracker.
Five-year tracker mortgages
A five-year tracker period gives a longer run at a fixed margin with the same transparency, avoiding a product search in two years while keeping the benefit of falls. Unlike a five-year fix, a five-year tracker is stress-tested against rate rises under MCOB, so it can support a smaller loan on the same income.
We can compare a five-year tracker with a five-year fix on your affordability.
Lifetime tracker mortgages
A lifetime tracker follows Bank Rate plus the margin for the whole mortgage term and never reverts to the standard variable rate. It suits borrowers who want one product for the life of the loan and accept the payment moving with Bank Rate for the duration. Early repayment terms vary by product; where there is no early repayment charge, it also gives full flexibility to repay or switch.
Ask us about a lifetime tracker.
Trackers with a switch-to-fix option
Some trackers let the borrower move to one of the lender's fixed rates at any time without an early repayment charge, which gives a way to fix later if the borrower's view on rates changes. The switch is made at the lender's fixed pricing at the time, not the pricing available when the tracker began.
Get in touch for a tracker with a switch option.
Capped and collared trackers
A collared tracker has a minimum rate below which it will not fall whatever Bank Rate does; a capped tracker has a maximum. A collar limits the benefit of falls and a cap limits the cost of rises; both are terms in the offer to read before choosing.
We can check the collar on a tracker you are considering.
Buy to let tracker mortgages
Landlords use trackers for flexibility when selling or refinancing, where the product carries no early repayment charge. The cost is a harder rental stress test: lenders stress a tracker with a loading above its pay rate, while five-year fixes are commonly stressed at a lower rate (on the cases we arrange, around 4.5% against around 5.5% on two-year fixes). The mechanics are in the buy to let mortgage guide.
Get in touch for a buy to let tracker chosen on the stress test and the exit.
Tracker vs fixed mortgage
A tracker moves with Bank Rate and a fixed rate does not, so the choice rests on the borrower's plans and how much of a rise they could absorb.
Get in touch to see the tracker and the fix side by side on your loan now and after a rise.
Tracker vs fixed mortgage
| Feature | Tracker mortgage | Fixed rate mortgage |
|---|---|---|
| Rate | Bank Rate plus a fixed margin | Fixed for the term |
| If Bank Rate rises | Pay rate rises by the same amount | Payment unchanged |
| If Bank Rate falls | Pay rate falls by the same amount, unless a collar applies | Payment unchanged |
| Who moves the rate | The Bank of England | Nobody, for the term |
| Early repayment charges | Vary: some have none, in our experience | Usually apply for the term |
| Switch option | Some allow a free switch to a fix | Switching early usually means paying the charge |
| Affordability assessment | Stress-tested against rate rises | Can be at the pay rate on fixes of five years or more |
| Borrowing capacity | Can be lower | Can be higher on five-year fixes |
| Suits | Flexibility, a falling-rate view, ability to absorb a rise | Certainty, maximum borrowing, tight budgets |
How a tracker mortgage is arranged
- We start with your plans to move or repay, the payment you could absorb after a rise and your view on Bank Rate, weighed against the fixed alternative.
- We compare the period, margin, collar, early repayment terms and switch-to-fix option across lenders.
- The application is a standard one, with the lender's affordability assessment carried out with the MCOB stress test applied.
- After completion the product runs and we track Bank Rate decisions. The switch to a fix is exercised when your view changes, and a product transfer or remortgage is arranged before the tracker period ends.
Tracker mortgage explained: the arithmetic
Step 1. The rate
Tracker rate = Bank Rate + margin. If Bank Rate is B and the margin is 1.00 percentage point, the pay rate is B + 1.00. When the Monetary Policy Committee moves Bank Rate by a quarter point, the pay rate moves by a quarter point from the next payment date the product specifies. The margin does not change within the tracker period.
Step 2. The payment range
The payments on an illustrative £200,000 loan over 30 years, whose tracker pay rate happens to be the illustrative 5.2% used across our guides, are set out in the table at the end of this section. The payment of £1,098.22 a month rises to £1,129.31 after a quarter-point rise and to £1,160.80 after a half-point rise, and falls to £1,037.28 after a half-point fall.
Illustrative arithmetic on hypothetical figures; 5.2% is not a product rate and the margin is not stated. Not an offer of finance.
Step 3. The collar
A collar at, say, the starting pay rate means the fall of 0.5 points in the table never reaches the borrower: the payment can still rise, but it cannot fall below the collar. We check the offer for a collar before you choose.
Step 4. The stress test
Because rises of 0.5 points and more are possible, MCOB requires the lender to assess the borrower against a higher rate than today's pay rate. That is why a tracker can support a smaller loan than a five-year fix assessed at the pay rate, and why the question for the borrower is whether the monthly payment after a rise is affordable.
Step 5. The switch
A tracker with a free switch to a fix lets the borrower stay on the tracker while rates are stable or falling and fix when the outlook turns, at the lender's fixed pricing on the day.
Bank Rate itself is outside the borrower's hands, but the margin (through the lender and the loan-to-value), the period, the collar, the early repayment terms and the switch option are chosen with the case, along with the judgement of whether a rise would be affordable.
For discounted and standard variable rates, see variable rate mortgages; for the fixed alternative, fixed term mortgages; and for savings-linked flexibility, offset mortgages.
The payment after a Bank Rate move
| Bank Rate move | Pay rate | Monthly payment | Change |
|---|---|---|---|
| Fall of 0.5 points | 4.70% | £1,037.28 | £60.94 less |
| No change | 5.20% | £1,098.22 | None |
| Rise of 0.25 points | 5.45% | £1,129.31 | +£31.09 |
| Rise of 0.5 points | 5.70% | £1,160.80 | +£62.58 |
Related topics
MortgageRead more about Variable Rate MortgagesVariable Rate Mortgages
Variable rate mortgages explained: standard variable, discounted variable, tracker and capped rates, with tracker vs variable and fixed vs variable compared.
Fixed Term Mortgages
Fixed term mortgages from one to forty years: how fixed rates are priced, why a five-year fix can let you borrow more, porting when you move, and the end of the term.
Interest Only Residential Mortgages
Interest only residential mortgages: the repayment strategy lenders require, equity and income criteria, part-and-part, offsets and retirement options.
Tracker and variable rate calculator
Shows how the payment moves if the rate rises or falls, against a fixed rate. The pay rate is Bank Rate plus the margin on a tracker, or the variable rate the lender sets. Enter 1 in the buy to let box to see borrowing on rent instead of income. Rates are illustrations: use your quotes.
Frequently asked questions about tracker mortgages
What is a tracker mortgage?
A tracker mortgage is a type of UK mortgage whose interest rate moves in line with an external benchmark, usually the Bank of England base rate, plus a fixed margin. Monthly payments rise or fall when the base rate changes, unless a collar stops the rate falling below a set minimum.
What is a tracker rate mortgage?
A tracker rate mortgage is a mortgage whose rate is set as Bank Rate plus a fixed margin, for example Bank Rate plus one percentage point, so the pay rate moves only when the Bank of England's Monetary Policy Committee changes Bank Rate. Tracker rate mortgages commonly run for two or five years, or for the life of the mortgage.
How does a tracker mortgage work?
A tracker mortgage adds a fixed margin to Bank Rate to give the pay rate, then moves the pay rate by exactly the amount of any Bank Rate change from the next payment date the product specifies. The margin stays fixed for the tracker period, after which the mortgage reverts to the lender's standard variable rate unless it is a lifetime tracker.
Is a tracker mortgage better than a fixed rate?
A tracker mortgage can suit borrowers who want flexibility, expect Bank Rate to fall and can absorb a rise, because it benefits from falls and, in our experience, some trackers carry no early repayment charge. A fixed rate can suit borrowers who need certainty or maximum borrowing. The choice turns on the borrower's plans and tolerance for a rise, because any forecast of Bank Rate can turn out wrong.
What are tracker mortgage rates?
Tracker mortgage rates are quoted as Bank Rate plus a margin set by the lender for the loan-to-value tier and product, giving a current pay rate that moves whenever Bank Rate moves. Trackers are compared on the margin, any collar, the early repayment terms, the switch-to-fix option and the period.
What happens to a tracker mortgage when interest rates rise?
When Bank Rate rises, a tracker mortgage's pay rate rises by the same amount from the next payment date the product specifies, and the monthly payment rises accordingly, by roughly £31 a month for each quarter-point on an illustrative £200,000 loan over 30 years at an illustrative 5.2%. A fixed rate would be unchanged for its term.
What happens to a tracker mortgage when interest rates fall?
When Bank Rate falls, a tracker mortgage's pay rate falls by the same amount and the payment falls with it, unless the product has a collar: a minimum rate below which it will not fall. A fixed rate would not benefit from the fall until its term ends.
What is a lifetime tracker mortgage?
A lifetime tracker mortgage tracks Bank Rate plus a fixed margin for the whole mortgage term and never reverts to the lender's standard variable rate. It suits borrowers who want one product for the life of the loan and accept the payment moving with Bank Rate; its early repayment terms vary by product.
Do tracker mortgages have early repayment charges?
Early repayment charges on tracker mortgages vary by lender and product. In our experience some trackers carry none, so the mortgage can be repaid, overpaid or switched without a charge, while others carry charges for part of the tracker period, for example 2% in year one and 1% in year two. We check the terms product by product before you choose.
Can I switch from a tracker to a fixed rate?
Some trackers have a switch-to-fix feature that lets you move to one of the lender's fixed rates without an early repayment charge; with others the charge applies, so we check the terms product by product. The fixed rate available is the lender's pricing at the time of the switch, so the option is used when the borrower's view of rates changes.
What is a collar on a tracker mortgage?
A collar on a tracker mortgage is a minimum rate below which the pay rate will not fall even if Bank Rate falls further. Some tracker products have one, and the offer sets it out. A collar limits the benefit of falling rates while leaving the borrower fully exposed to rises.
Are tracker mortgages stress-tested for affordability?
Tracker mortgages are stress-tested for affordability. The Financial Conduct Authority's MCOB rules require lenders to consider likely rate rises over at least the first five years, and the exemption for rates fixed for five years or more does not apply to a tracker. A tracker can therefore support a smaller loan than a five-year fix.
What is the difference between a tracker and a discounted variable mortgage?
A tracker follows Bank Rate plus a fixed margin, so its changes come from outside the lender and are easy to see. A discounted variable mortgage follows the lender's own standard variable rate less a discount, so its changes are at the lender's discretion and may differ from Bank Rate in timing and size. Both can rise and fall.
What happens at the end of a tracker period?
At the end of a two- or five-year tracker period the mortgage reverts to the lender's standard variable rate unless a new product is taken, so a product transfer or remortgage can be arranged before the end date, as at the end of a fixed term. Lifetime trackers do not revert.
Is a tracker mortgage good for buy to let?
A tracker mortgage can suit buy to let landlords who want to sell or refinance without early repayment charges, where the product has none. Trackers are stressed with a loading on the rental coverage test, while five-year fixes are commonly stressed at a lower rate (on the cases we arrange, around 4.5% against around 5.5% on two-year fixes), so a tracker can support a smaller loan from the same rent.
How often does a tracker mortgage rate change?
A tracker mortgage rate changes only when the Bank of England's Monetary Policy Committee changes Bank Rate, with the mortgage rate moving from the next payment date the product specifies. Between Bank Rate decisions the tracker rate does not move.
Can I overpay a tracker mortgage?
You can overpay a tracker mortgage. Where the product carries no early repayment charge, overpaying costs nothing extra and reduces the balance; where it carries a charge, the product's overpayment allowance sets how much can be paid without it.
What is a tracker mortgage calculator?
Our tracker and variable rate calculator takes your loan, term and pay rate (on a tracker, Bank Rate plus the margin) and shows the monthly payment now, after falls of 0.25 and 0.5 points and after rises of 0.25, 0.5 and 1 point, against the payment on a fixed rate. It also gives a guide to the maximum loan, on income for a home you live in or on rent for buy to let, so you can test whether a rise is affordable before choosing a tracker.
Are tracker mortgages cheaper than fixed rates?
Tracker mortgages can be cheaper than fixed rates at the outset or dearer, depending on market expectations: when rates are expected to fall, trackers can start above fixes, and when rates are expected to rise, they can start below. The comparison is made on current pricing and on the payment after a rise.
How long does a tracker mortgage take to arrange?
A tracker mortgage takes as long as any residential mortgage: the time from application to offer depends on the lender and the case. The application goes in with the margin, period, collar, early repayment terms and switch option compared across lenders, and the lender runs its affordability stress test. A product transfer onto a tracker with the existing lender can be faster where the lender does not reassess affordability.
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