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Contractor Tracker Mortgages - finding a suitable deal

Tracker mortgages can often have competitive interest rates, and are widely available to contractors. We will help you compare the options and find a mortgage that suits you.

What is a Tracker mortgage?

A tracker mortgage is a type of variable rate mortgage which “tracks” a base rate – usually the Bank of England’s base interest rate

If you choose a tracker mortgage, your mortgage repayments could change from month to month. Often tracker mortgages have a lower interest rate than a fixed rate mortgage because they bring with them the risk that your mortgage costs could increase at any time following a rise in the rate that you’re ‘tracking’.

Is a Tracker Mortgage the same as a discounted rate mortgage?

While both are types of variable rate mortgage, these products are different. A discounted rate mortgage follows the lender’s own standard variable rate (SVR), offering a set percentage off that rate. 

For example, if the lender’s SVR were 4.5%, the discounted rate might be 2.5%. If the lender’s SVR were to increase to 5.25%, the discounted rate would increase to 3.25%.

The key difference is that a tracker rate mortgage aligns with an external base rate, usually the Bank of England’s. It will be set at a value above base rate – often 1% or 1.5%. With a discounted rate mortgage the lender can change the interest rate whenever they choose.

When is it best to choose a tracker mortgage?

Generally, it’s best to choose a tracker mortgage when the economy is fairly stable and interest rates are not expected to increase. An even better time is when interest rates are anticipated to fall. 

It is always advisable to explore the risks of a tracker mortgage with an experienced mortgage advisor before making any decisions. We will give you tailored advice based on your specific situation.

Is a Fixed or Tracker mortgage best for a contractor?

Choosing fixed or tracker mortgage products should be based on your specific situation and circumstances. Some contractors will find that a tracker is the best option for them, while others will prefer the predictability of a fixed rate mortgage. 

Generally, fixed rate products are the most popular type of mortgage in the UK. There are many fixed rate contractor mortgages on offer. 

Are Tracker rates available for contractors looking to Buy to Let?

Contractors can access the same Buy to Let mortgage deals as people in other roles. There are many Buy to Let tracker mortgages in the marketplace, along with fixed rate deals, discounted rate products and standard variable rates. 

Again, it’s a good idea to talk to a broker to understand the options and the implications of rate increases.  

Pros and cons of tracker rates

The advantages of a tracker rate mortgage include:

  • Tracker mortgages can save you money when interest rates are falling.
  • They’re transparent: they only change when the Bank of England cuts or raises interest rates, and by a static amount.
  • Falling rates may give you enough of a saving to to overpay your mortgage, so that it ends sooner.
  • Some tracker products have a cap limiting the amount rates can rise.

The key disadvantages of tracker mortgages are:

  • When the Bank of England raises interest rates, your monthly mortgage repayment will increase.
  • If interest rates rise more quickly than you expected and you want to switch mortgage products, you may face an early repayment charge.
  • Some tracker mortgages have a ‘collar’ – a rate they won’t fall below.

How can a Mortgage Broker help?

We’re here to help you understand the risks, rewards and typical costs of different types of mortgage. Whether you’re a First Time Buyer or an experienced home owner, we will tailor our advice to your situation. We work with many contractors and fully understand the way that you work and what’s important to you.

In addition to exploring how much you could borrow, monthly mortgage repayments and preparing your mortgage application, we will also advise you on insurance products to ensure you and your family are covered. 

Mortgages by Mcateer Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.


Some buy-to-let mortgages are not regulated by the Financial Conduct Authority.

Approved by The Openwork Partnership on 02/01/2024