What is a tracker rate mortgage?

If you have a tracker rate mortgage, the proportion of interest you pay on your mortgage will typically be the base rate plus or minus a specific percentage. For example, if the interest that you pay on your monthly repayments is set as the base rate plus 1.5%, and the base rate at the time is 1%, the amount of interest that you will need to pay on your monthly repayment will be 2.5%.

Because this type of mortgage tracks the base rate, this means the rate you pay can change at any time. This is just like a Standard Variable Rate mortgage. So, if the base rate in the above example increased to 1.5%, the rate you pay would then go up to 3%. At the same time, if the base rate dropped, then so would the monthly rate that you pay.