HSBC Tracker/Fix

figgyroo

I'm just doing a bit or research ahead of meeting a mortgage advisor next week.
I am looking for a 5year fixed deal and the HSBC one at 3.99% (£999 fee) looks good. I've also noticed they have a fee-free lifetime tracker at BOE Base Rate + 2.89% giving a current rate of 3.89%. Given that I think that the rate will be cut to near zero before rising again, and that the tracker deal has no costs to set-up and no costs to exit, what do you think of going on the tracker and then changing to a fix when the rates are set to rise again?
Or do you think this is a risky strategy and it's best just to grab a decent 5year fix whilst they are available?

cocktail

figgyroo wrote: »

I'm just doing a bit or research ahead of meeting a mortgage advisor next week.
I am looking for a 5year fixed deal and the HSBC one at 3.99% (£999 fee) looks good. I've also noticed they have a fee-free lifetime tracker at BOE Base Rate + 2.89% giving a current rate of 3.89%. Given that I think that the rate will be cut to near zero before rising again, and that the tracker deal has no costs to set-up and no costs to exit, what do you think of going on the tracker and then changing to a fix when the rates are set to rise again?
Or do you think this is a risky strategy and it's best just to grab a decent 5year fix whilst they are available?

i would go for the tracker rate now, rates are probably going to go down further and stay there for the short term. fixed rates will always be available in the future.and as there are no exit fees u can decide when u want to remortgage as and when the rates go up

m_13

I'm not sure if I'd go with this advice based only on interested rates as 3.89% tracker compared to 3.99% fixed isn't much difference and I doubt you'd find anybody who thinks that rates won't rise over the next five years.

As I've posted elsewhere, the fixed rate offer is very, very restrictive in terms of overpayments as you can only pay 20% of the monthly payment extra each month so if your mortage payment was £100 then you would be allowed to pay £120 and no more. Bear in mind the maximum LTV is 60% which may be OK for you.

The fee free lifetime tracker is available for maximum 75% LTV and allows unlimited overpayments. You could take it out and then pay it off and switch without an exit charge. However, mortgage rates were over 5% less 6 months ago so I don't know what kind of fix will be available in 12 months.

If you feel you want to fix your payments and cannot overpay then the fixed rate gives you certainty. However, if you want to be able to overpay then you will be restricted by the fixed rate but could always save the money somewhere else!