Offset Base Tracker +1.89% or 10 Year Fixed at 4.59%

LULULU1

Hello,

I have a low LTV (50%) and qualify for both of the above deals which I am mulling over.
I know nobody knows the future but any thoughts or advice would be apprechiated.

Fees with Chelsea for the 10 year deal are are £995.

Fees with First Direct for the tracker are £799.

I would pay any fees using savings.

Many thanks in advance for any thoughts.

getmore4less

Paying the fees from savings makes no difference to the calculations for which is best you have to adjust one loan by the difference in the fees.

Things you need to think about
What size is the mortgage and the normal term,
What is your max payment so what rate could you pay
If you take the offset and pay the same as the fix how much overpayments will you accumulate over the years while rates a re low to cover higher rates later.
Can you get other cheap money to offset not so easy these days.
Do you need certainty or flexability.

LULULU1

Getmoreforless

My current mortgage is 75k with 22 years remaining.

I hope to repay this over 12 years.

I can aford to repay approx £750 per month.

Not sure what you mean about cheap money.

Thanks

getmore4less

http://www.whatsthecost.com/mortgage.aspx

run some numbers

1. £75200 22y @ 4.59% £453pm, pay £750pm 127m(10y 7m)
2. £75000 22y @ 2.89% £384pm, pay £750pm 115m( 9y 7m)

After 2 years at these rates and paying £750 you have the following left
1. £63,601.28 after 10 £4,956.86
2. £60,949.77

Mortgage 2 can go to 5.65% after 2 years and still have less than 1. left after 10.

£750 over 22 years you can go to 10.9% before it becomes an issue the longer it stays below this rate paying £750 the higher rate you can go to.

With £750pm you don't need the fix yet but if rates rocketed it might need to be considered.

You could take the fix and have a small loan left after 10 years if you overpay and not have to worry too much about future rates.

You could take the offset and build up some buffer funds to cover rate rises reviewing rates regularly, need to factor in new set of fees though.

what other savings do you have and what rate are you getting, more potential offset funds.

Lots of options and different senarios, a 10y fix wil see you though as long as you can overpay enough for the 10y then there will be not a lot left.

If you think inflation and rates will go up then this could be a good option even if you don't overpay. Fix and inflate the debt away.

If you think rates will stay low then the offset gives you a chance to hit the debt now.


Play with some of the numbers and try to make a choice on what you would be happy with, understand the trade offs with real numbers.


This all ignores the income risks, loss of job can influence which way to go.

Cheap money is money at a lower rate than the mortgage that you can use to offset.

One source of cheap money is www.stoozing.com but with the Ballance transer fees this is less useful but 0% purchase can still work with offset mortgages.

LULULU1

Getmoreforless.

You are a complete star.

Many thanks for your informative and helpful responce.

Lu