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With a base rate tracker mortgage the rate of interest you pay is tied to the base rate set by the Bank of England.

Typically the tracker mortgage rate will be set as a percentage above the base rate and although the resulting interest rate is usually lower than a mortgage lender's standard variable rate,although this will vary from lender to lender. A main advantage of a tracker mortgage is that the difference between the variable rate and the base rate is usually a lot smaller than the margin between an standard variable rate mortgage and the bank base rate so you will end up paying less overall.

In addition, if the base rate falls, the interest payments on your mortgage loan will fall accordingly, no matter how low the base rate goes. However, remember that the bank base rate can rise as well as fall which can make budget planning difficult. (see fixed rates)