A tracker rate follows another rate. It can track below the rate it is following, but more commonly it tracks at a percentage above it.
As the rate is variable, you benefit from lower payments when the rate is low but will suffer from higher payments if the rate being tracked goes up.
Introductory tracker rates can be among the very lowest mortgage interest rates available. However, like all variable rates, they can go up as well as down. Also, most introductory tracker rates will most likely have an early repayment charge if you remortgage or repay the mortgage during the introductory period. If you're on a lifetime tracker mortgage, there will sometimes be an early repayment charge for a period after you take it out.
Most tracker rate mortgages will let you make overpayments without charging an early repayment charge – usually you're allowed to overpay up to 10% of the outstanding mortgage balance per year.
If you've come onto a tracker rate after being on an introductory fixed or tracker deal, there aren't normally any early repayment charges if you want to overpay, remortgage or pay off the mortgage early (although check with your lender prior to making any decision).
