Fixed rate or Tracker.

Gediknight

First post, please be gentle.

After 14months finally sold my property, at present have agreed a 4.85% 5yr fixed with Halifax. £995 product fee etc. We move into our new property on the 28th August 2009. As Halifax are our original lenders, they have also offered us a 3.54% tracker for 3yrs. This equates to approx £132.00 per month saving and would take at least 4 interest rate changes to catch up with the 4.85% fixed rate. Trouble is I can't make my mind up what to do, they also pay your council tax upto £1000 as well taking the tracker rate, the fixed rate was agreed before they introduced this incentive.

I know it's a gamble going onto a tracker rate, but any extra money saved and council tax rebate, could go towards paying off part of the mortgage. Is anyone else in a similar position to myself? I would prefer to go with CO-OP who are offering a 2.39% tracker, but I've been told it would take approx 8-12 weeks to process that application. I've thought of going onto the Halifax variable for the whole amount and then processing it at my convience, any advice would be appreciated.

sys4096

Similar situation as yourself. Just ending a 5 year a&l deal on 5.59 at end of august - thinking of going on to a tracker which is base + 3.09% will save me £200 per month.

Everything I've read states that interest rates are predicted to remain low well into 2010, and I'm thinking with a 2 year fixed if they start to rise I've got 2% or 8 interest rate rises of 1/4 of a per cent until I reach the rate I'm on now.

Only thing I might do is wait until next month to see if the tracker rate falls below base +3.09% before signing up.

The one thing I've realised, is that whatever you do fixed or tracker it's all one big gamble (and stressful too!)

belfastgirl23

I keep posting this link so apologies for anyone who has read it already but I thought it was very interesting
http://www.guardian.co.uk/money/2009...erest-security

I'm sticking with the variable rate at the minute but if I were going for anything right now it would prob be a 5 year fix though my interest rate is so low that it would need to be a very good rate to tempt me

edited to say I think for me the council tax thing would swing it as long as your mortgage isn't stretching you to the limit. If things are tight then you should go for the fix just for security. But if you could afford for it to go up a couple of % then you may as well take advantage in the meantime

Gediknight

I'm sticking with the variable rate at the minute but if I were going for anything right now it would prob be a 5 year fix though my interest rate is so low that it would need to be a very good rate to tempt me [/QUOTE]

Link no workey.

maveli

http://www.thisismoney.co.uk/news/article.html?in_article_id=488698&in_page_id=2&ct=5

belfastgirl23

oops sorry try this

http://www.guardian.co.uk/money/2009/jul/18/mortgages-trackers-fixed-rate-interest-security

dfh

Hi-rates are historically low at the minute so I would be tempted to go for a five year fix.That will ensure peace of mind and ensure you always know how much you are paying.Plus even if house prices keep falling for a while,things should have evened out in five years so you wont have to remortgage when you are in negative equity.Remember the double digit BOE rates? What if we went back to those rates?

Watty1

Have just been going through this debate with myself. Finally decided to split my large mortgage and put half on a 5 year fix and half on a 2 year tracker. If base rate goes to 2.25 then I'm better off on this deal. If things stay as they are then the tracker was very tempting - but - I kinda figured that rates will not stay this low for the whole 5 year period and drove myself mad with the what ifs of it all......finally decided that doing both offered me some peace of mind. And dfh has a good point about the double digit rates...or even if we went back up to just 7 or 8 a tracker would be steep then.

*David*

Hi Gediknight,

I have gone with the Co-Op, 1.89 above BofEBR, on the basis that over three years there is going to have to be a bery steep rise in interest rates for me to lose out over going with a fixed 4.5% over the same peiod. Its a gamble, but I think we are in ressession for a while yet and and large increases in interest rates will not help.....

I have found the Co-Op to be pretty quick in processing my application, but everything is pretty straight forward in my applciation, I can easily prove income and house value and I have been told to expect the formal offer this week which is about 2 and a half weeks after the initial phone call to them.

Is this any hekp ???

Good Luck !