Is taking part interest-only or a tracker rate the key to getting a better mortgage?

by Aaron Strutt

Mar 27 2026

Many banks and building societies have increased their mortgage rates by over 1% since the war in the Middle East began, pushing up borrowing costs.

While some lenders still offer two-year fixes from 4.5%, others have pulled most of their sub-5% fixed rates, including big lenders like HSBC and Coventry Building Society. 

With higher rates, more borrowers will be wondering what they can do to lower their monthly costs, and two options include interest-only and Bank of England tracker mortgages.

Is it time to take out a tracker-rate mortgage? 

Most mortgage borrowing cost tables show how much cheaper the Bank of England tracker rates are than the fixes, especially for larger loans. This means many of the tracker rates are looking like a good bet.

Halifax has a two-year tracker at 0.21% over the current 3.75% Bank of England base rate. It has a £1,499 fee and no early repayment charges. Applicants need a 40% deposit to qualify. With the base rate potentially set to stay on hold and even come down if the UK economy struggles even more, so trackers could give borrowers an option to get out of fixing at a much higher rate.

While there is always the risk of the base rate rising and monthly payments going up with a tracker, many borrowers will think it’s a risk worth taking given the big price difference between trackers and most fixed rates.

Is a part interest-only mortgage an option?

With higher rates, part-interest-only and part-capital-repayment mortgages are also a good option to lower monthly costs. It is possible to get 50% interest-only and 25% capital repayment for a 75% loan-to-value mortgage through multiple lenders.

Santander has a great part interest-only mortgage policy

Santander has a great bit of criteria for higher earners, when any part of the mortgage is on an interest only basis and the borrower(s) has a 15% deposit plus a gross income of £200,000 or more, they can have 75% of the mortgage on interest only and 10% on capital repayment. For those earning less than £200,000 any lending over 50% loan-to-value must be on a capital and interest basis and 35% on capital repayment. 

Aaron Strutt, product director at Trinity Financial, says: "It is frustrating to see the fixed rate price increases still coming through, but we may well see more next week as swap rates are still fluctuating. At the moment, borrowers can get fixed rates around 0.5% cheaper by shopping around. Nationwide has some really cheap fixes which significantly undercut many of its competitors.

"Nationwide is still offering two-year fixes from 4.5% for home movers borrowing over £300,000, which significantly undercuts many of its competitors who are offering more fixes over 5%. If you are thinking about taking an interest-only, click here for our blog on making mortgage overpayments."

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7016 0790 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change.

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