HELP! Advice please on Fixed Rate or Tracker

bodgery

I'm new here, so hi to you all...

would really appreciate your advice on the following. I have a reasonably chunky mortgage, currently on Fixed Rate, finishing at end of April.

I'm now looking to apply for a new mortgage. My mortgage advisor suggests one of two deals:

1) Portman 4.3%, 2 year FR £499 arrangement + legals etc;

2) BM Solutions 3.99% tracker 2 yrs (i.e. 0.51% below BoE rate). £1499 arrangement fee + legals etc.

All depends of course on the likelyhood of an increase in base rates and by how much.

For me, the large fee on option 2 is worth it, as long as rates don't go up 0.5% or more,at least until near the end of the term when it wouldn't make much difference to the average cost over 2 yrs.

Any views on where rates might go? Any better deals out there? My preference would be Fixed Rate, so a Tracker would have to be pretty good to tempt me away...any better fixes out there?

Many thanks!

B.

herbiesjp

What figures are you looking at:

Property value
Mortgage needed
Term
Repayment or interest only?

Have you discounted maybe higher rates that do not charge fees, or at least have lower fees?

Ian_W

Have you read Martins article - Fixed v Discount at http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1098805346,64662,? It's more to do with attitude to risk and whether you can afford to gamble on lower rates, than whether they'll go up or down over 2 yrs,

TBH, no-one *knows* what will happen in 3 months time, never mind over 2 yrs, whatever their opinion is it's pretty much a guess. For example, in Jan 2005 most experts were predicting rises with rates between 5-6% by the end of 2006. This Jan most experts are predicting down in May/June and maybe a further fall later in the year. Why should they be right now when they were wrong 12 months ago?

bodgery

Fair point! Thanks for the pointer to the article. By the way, I did say Tracker, not Discount. I wouldn't personally touch a discount, as it's at the pure whim of the lender, whereas at least the BoE base rate has some more open analysis around it.

Okay, so leaving my perception of risk to one side, can either of the options I've listed be beaten? i.e. any 2 year fixes with no overhang for less than 4.3%? or a BRT less than 3.99% or maybe 3.99% with free legals and valuation?

Thanks again!

AndrewSmith

Totally agree with IanW on this one,

It's not about anyone elses opinion but your own. After all it's your mortgage and you must pay for it.

If you want absolute certainty that your rate will remain unchanged the go fixed
If you are prepared to take the risk on rates not rising, but possibly get a lower rate initially then go for a tracker.

Click on this thread to see where I have carried out a calculation to compare the initial payment rates including adding the fees to the loan of two very similar products

http://forums.moneysavingexpert.com/showthread.html?t=158275&page=2&pp=10

The portman deal assuming £100,000 mortgage (to allow comparison with the calculations in the attached thread) would work out as follows:

Repayment £547.26 / Interest Only £360.12, incuding adding the arrangement fee to the loan.

It is a decision that no one else should influence you on at all.

Andy

bodgery

Thanks Andy. Agree with you on that - an unfair question I posed really, so I'll put it to one side.


Here's the core of what's left of my question then...

Can the rates I listed be beaten?

Cheers

B.

AndrewSmith

The rates are certainly top on my sourcing system.

With the Birmingham Midshires product just make sure that your Adviser has access to that product as it is an exclusive deal available only through the 'Pink Network'

Andy

herbiesjp

You can get 3.99% with another lender offering free legals and free valuation - not sure on the BM details

bodgery

Yes, I heard about the 3.99% with free legals - understood it was Bank of Scotland - my adviser looked into it, but only found a 4.45% (approx) rate...who is offering the deal you mention? He can get the BM deal for me, if I can get 3.99 with free legal/valuation, I'd go for it!!

herbiesjp

It is a Bank of Scotland exclusive that only some of us brokers will have access to.

AndrewSmith

The reason your broker could not find it is because you have to be a member of their "100 Club" to have access to it, and to quote it.

It does indeed have free legals however the valuation fee is not free, at £605.

Redemption penalties are 4% of the loan amount any time in the initial incentive period.

Andy