This offers you a Variable Rate Mortgage with an interest rate that rises and falls in line with a specific benchmark, usually the Bank of England Base Rate (Base Rate Tracker Mortgages). A so-called Libor Tracker Mortgage would follow the London Interbank Offered Rate which is the rate that banks notionally buy and sell money between each other. It can vary from day to day and is closely link to the Base Rate.
The tracker rate would usually be expressed as a certain percentage rate above the benchmark rate.
Plus Points: Usually there are no penalties for cancellation and for transferring to another mortgage product or to another lender (known as redemption penalty and lock-in periods), giving you the flexibility to change your mortgage type or move to a different lender.
Points to Watch: Interest rates can go up as well as down. When it rises sharply, your interest payment instalments may increase substantially.
