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What is a tracker mortgage and fixed rate mortgage

22 January 2020

Whether it’s buying your first house or switching your mortgage, we can help you understand the different types of mortgages so you can decide which one works best for you.

What is a Tracker mortgage?

A tracker mortgage is a type of variable mortgage, which means that the amount of interest you pay is dependent on a reference rate, usually the Bank of England Base Rate. So for example, if the base rate is very low, then a tracker mortgage may be a good option, but you cannot rely or predict whether the base rate will increase during the term of your mortgage.

What are the advantages of a tracker mortgage?

The main advantage of a tracker mortgage is when interest rates are low, it can be cheaper than having a fixed rate mortgage. It’s also beneficial if you think interest rates may decrease in the future, so you can take advantage when this happens. Although, if the interest rates were to increase, your repayments may be more expensive than if you would have taken out a fixed rate mortgage.

What is a fixed rate mortgage?

A fixed rate mortgage can be best described as a mortgage that has an initial fixed rate for a set term (usually 2 to 5 years), before it reverts, usually, to the mortgage provider’s Standard Variable Rate (SVR). This means that your monthly repayments would be a fixed amount each month and wouldn’t increase within your fixed term deal.

What are the advantages of a fixed rate mortgage?

The main advantage of a fixed rate mortgage is that you will know exactly how much your monthly mortgage repayments will be. Therefore, you can be sure that you can afford your mortgage for a set period, without the worry that your mortgage payments will increase. This is different from a tracker mortgage, as with this your monthly repayments will vary depending on the Bank of England Base Rate.

What is the difference between a fixed-rate and tracker mortgage?

The interest rate on a tracker mortgage, and consequently your monthly repayment, can fluctuate at any point throughout the term of the mortgage. With a fixed rate mortgage however, you can keep track of your spending by knowing exactly how much your mortgage repayments will be each month.


It all depends on what works best for you and which mortgage repayment system best suits you and your situation. As everyone will have different levels of borrowing and personal finances, it’s always good to do a comparison of both fixed and tracker mortgages to work out which is best for you.

What to do if you are thinking about changing your mortgage?

Whether you are thinking about getting a new mortgage dealadditional lending or moving to a new home The Co-operative Bank can guide you on your next steps. We have dedicated web pages that will provide more information about the mortgage services we offer.
When keeping your existing mortgage with us, you must ensure that you have read our mortgage terms and conditions, and important documents stated on our website. We also recommend you save copies of all these documents for your future reference.


Your home may be repossessed if you do not keep up with repayments on your mortgage.

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