fix or stick with tracker

gareth79

Many people are now saying fix your mortgage. However with a tracker 0.23 above base i am thinking best to stick with this...even if interest rates rise to 4.5% then my tracker will still only be 4.73% still below most fixed rates at the moment...plus i have a 148000 mortgage on a 180000-185000 house

atlantis187

stick with the tracker mate mine is 0.79 above base on a mortgage of £136000 am confident rates will stay low atleast until towards end of 2010 in which time I would have bought the outstanding amount considerably.

opinions4u

gareth79 wrote: »

Many people are now saying fix your mortgage.

The majority are not always right.

However with a tracker 0.23 above base i am thinking best to stick with this

It looks good. I would stick with it myself, but I would also be building up a savings pot (or overpaying the mortgage) to ensure that I can afford higher mortgage payments if the come along. I would also closely track the fixed rate market to see if and when they start to rise. That might be the time to jump.

If you understand the risks of not fixing and can live with these, and understand the value of staying on your tracker, then stick with your tracker.

But give serious thought to putting the money you are saving to one side. It might get you out of a hole if rates do turn against you.

dimbo61

Has your tracker got a time limit ie 2/3 years ?
Or is it a lifetime deal ( great if it is )
Was the rate 5.73 last year BOE ( 5.5) +0.23= 5.73
and what were you paying then ?
You should be paying the extra money you are now saving into regular savers and ISA,s .

snarffie

gareth79 wrote: »

Many people are now saying fix your mortgage. However with a tracker 0.23 above base i am thinking best to stick with this...even if interest rates rise to 4.5% then my tracker will still only be 4.73% still below most fixed rates at the moment...plus i have a 148000 mortgage on a 180000-185000 house

I have the same rate on a lifetime tracker. I've considered fixing at 3.99 for 5 years, but decided not to jump at this point. As you say, rates will need to rise a bit before current fixes look good against the +0.23 rate.

We will have to do our best to keep an eye on rate rises over the next few months/years. With such a good rate, it's important not to be too hasty and jump too soon onto a fix because of some panic generated by vested interests.

In the meantime, we are saving our overpayments based on a rate of about 14%, so we could 'afford' a huge rate hike similar to that of a short period in the 90's, although such a hike would be pretty catastrophic and make it nigh on impossible to reduce the term of the mortgage, which is what we are doing now.

opinions4u

snarffie wrote: »

In the meantime, we are saving our overpayments based on a rate of about 14%, so we could 'afford' a huge rate hike similar to that of a short period in the 90's, although such a hike would be pretty catastrophic and make it nigh on impossible to reduce the term of the mortgage, which is what we are doing now.

A superb way to manage your mortgage.

seikothrill

There was an interesting article regarding this in the Sunday Mail today. They quoted the Bank of England governor as saying base rate could remain this low until September 2010 and this is changing peoples views on fixing now.

caracal_77

I'm on a 0.99% above BoE base rate and not in a rush to fix. I think it'll take some time for the BoE rate to be above 4-5%. Also by then if the economy improves, we might see better deals as far as fix % and LTV's.

natman

Hi,
I have always loved this debate - to fix or not to fix, to keep with a tracker or to get rid.................... For me theres no real right answer so long as you know the risks and advantages of both products.
We have recently moved, we had an existing Tracker mortgage at 0.5% above base, it was for £25,000, on our property valued at £140k. payments very easy, we had only 5 years left to pay on our previous house as we overpayed and reduced term etc.

We then moved and needed an extra £65,000 in addition to the existing £25,000.
We decided to transfer our tracker at 0.5 above base on 25k and take out fix at 4.89% for three years on the 65k ( ok the 4.89% can be beaten now )

I also have savings - Basically I have £25,000 in savings earning from 3% - 7.2% at present.
I can over pay my fix £499 a month with no charge - which I have been doing
I can overpay any amount on the tracker - I have not touched this. as interest is only 1%

My thoughts are this - I am going to try and overpay £499 a month on my fix prodcut for the nex 2.5 years
I will see what happenes to base rate - if base rate jumps up so much in next 2.5 years I may pay the whole tracker loan off, or if in 2 1/2 years I may combine both mortgage products for a new product.

Like I said before Its swings and roundabouts be prepared that base rate wont stay this low for ever but for next couple of years it probably will stay low.
Give your self flexibility, try and overpay and reduce term and interest. if you do that you should be in a better position.

RobertoMoir

gareth79 wrote: »

Many people are now saying fix your mortgage. However with a tracker 0.23 above base i am thinking best to stick with this...even if interest rates rise to 4.5% then my tracker will still only be 4.73% still below most fixed rates at the moment...plus i have a 148000 mortgage on a 180000-185000 house

It's not about a hard and fast right and wrong. It's more like your feelings about marmite. As the marmite people say themselves you'll either love it or hate it. As for mortgages the fix or tracker decision depends on personal circumstances and each choice has potential advantages and potential problems.

Gorgeous_George

Your repayments (assuming a 25 year deal) are £539.87.

Fix at 4.5% and they shoot up to £822.63.

I'd save the £300 per month and stick with the tracker. For most people on extremely low tracker rates, fixing is not a good choice at the moment IMHO.

If your tracker has a 3% collar or if you couldn't manage a mortgage rate higher than the currently available fixes, then fixing would be worth considering. I'd prefer a fix for ten years and wouldn't even look at a two or three year fix.

GG