Changing First Direct Mortgage application to a newer product

eaglesrest

Hi,

I have recently started the application process to remortgage to a FD 3 year fixed rate offset 5.95% mortgage deal which has £299 in fees. I notice that FD are now offering a tracker at 5.98% with no fees and no surrender admin fee for the life of the mortgage.

The first part of my query relates to a comparison between the products. I like the idea of flexibility to get a better deal when the markets pickup, without penalty so the tracker may be the best option. Additionally with economic growth being slow interest rates may be cut, again good news on a tracker. Does this make sense?

The second part is relating to the actual mortgage application. Would I need to cancel the application and start again (phone interview, send in documentation etc) or would FD transfer the application?

I realise I can ask FD but wanted to get my options clear before speaking with CS.

Thanks!

Locoblade

Regarding the first part, although "who knows" should be the official answer, from what Ive been reading in the last couple of weeks, it does seem that rates are more likely to drop in the near future than rise, due to an attempt to stave off impending (if not already with us) recession etc.

Im in exactly the same boat as you with almost exactly the same products under consideration. I was looking at the 5 year FD offset fixed but have now decided to go with the +0.99% tracker with the hope of saving a little bit short term and possibly fixing in a year or so (without penalty obviously) if the fixed rates drop too.

One thing you may need to consider though if you're also thinking of jumping to a fix in a year or so's time is your current LTV. If its at or near 80% already, the likelyhood is that house prices will continue to fall in the near future so unless you're paying huge chunks of capital off each month (unlikely with a loan near 80%), then the house is likely to depreciate faster than you're paying off capital. That means in a year's time even if we do end up with cheaper rates on offer, you may not be able to take advantage of them because your LTV will have actually risen, in worse case scenario above 100% where you'd struggle to remortgage at all. Thats not a huge concern as long as the BoE rate doesn't rocket back up again as you probably wouldn't want to remortgage anyway, but if those two scenarios play out with price drops and big base rate interest hikes, you could end up in trouble.

eaglesrest

Thanks for the reply. I did switch to the new Tracker product, although lost my £299 booking fee unfortunately,

Still, I think on balance it was the right move.