Tracker or SVR?

DilbertJones

What is the benefit between the two? my current deal expires end of Sept ( I know left it late) and I can revert so SVR of 6.4% or go Tracker at a rate of 2.29% above base rate currently 7.29%

Why is the tracker so much higher then svr? and what benefits are there over each other?

The tracker has no fees what so ever.

not sure if i want to go fixed rate as to get a good deal i need to fix for 5 years but thats a long time and i can see the rates falling somewhat in that 5 years.

Thanks for your advice

Locoblade

Do you have a poor credit history and/or very low equity in the house? If not, the tracker you've been offered is ridiculously high, you can get +0.79% baserate trackers with no fees with other lenders, if not lower.

The difference between a tracker and SVR is that a tracker will always follow the Bank of England base rate, generally on the day it changes. If BoE goes down 0.25%, your interest rate goes down by 0.25%. When you're on SVR though there's no guarantee that when the BoE rate drops, the lender will pass on the saving. If they do, there's still no guarantee it will be done straight away or that you'll get the full reduction. Likewise if there's a rate rise you may find the SVR goes up MORE than the BoE rise, and may occur immediately.

In your case though, if they are the only two choices you have, the SVR would be better Im sure.

DilbertJones

dont have bad credit history, i must admit i never called them about the tracker i called them to find out my new rate and enquired about the fixed rates, was given 6.39 for 2 years or 5.84 for 5 years.

took mortgage out 3 years ago, borrowed £75k house was bought for £105k 25% of the £105k was put in by festival housing on a DIY Shared ownership scheme.

I will call them later and see what tracker rate they can give me.

Locoblade

I'd do lots of reading on here though before you decide, and certainly dont discount the 5 year fix because it seems a long time. In 2 years time the market could well in a similar/worse condition then than it is now, so you could end up paying more to remortgage again then, and if you lose £10-20k of value in your house over the next couple of years you won't be in a position to take advantage of better rates if they do exist anyway because your equity will be virtually zero, so thats another thing to take into consideration.

DilbertJones

if only we could have use of a crystal ball huh???