RBS 2 year or 5 year tracker????

emma2009_2

Hi

We have sold our house, currently with a northern rock variable rate mortgage at 4.79%. When we move house we would like to go on an interest only mortgage for a few years to make the payments cheaper, obviously we will still pay into an ISA every month and continue saving, and eventually return to repayment.

The best rates I have found are with the RBS / Natwest. For 80% LTV they will offer a 2 year tracker at 2.99% or a 5 year tracker at 3.24%.

What do you think in the current market, is it better to just take a short term rate, or slightly longer, i know the rates probably will go up but i just dont know how much or how quickly. Bearing in mind there is a product fee of £799, plus the legal fees for remortgaging to think about........any advise would be great

beecher

Will they allow you to have no repayment vehicle other than an ISA?

With an 80% LTV I'd be looking at a fixed rate over 5 years myself. Those trackers are going to look pretty expensive when rates go up, so are only an option if you can easily afford an 8% mortgage in my opinion.

emma2009_2

an advisor at the halifax (who i am not going with anyway) told me i would be better with a tracker rate, as the chances of interest rates going up that much in 2 years would be very low......do we think it would be better to fix, it would just mean the payment wud be so much higher at a time when we need it to be lower (i have one year left at uni before i graduate)

in terms of the savings, they didnt say it had to be an IS, they just asked if we have something in place to save into for repayment

beecher

I wonder what the adviser from Halifax would've told you this time last year - would he/she have an idea base rates would be at 0.5%? If you're willing to take the risk, fine, but make sure you can still afford higher payments as it'd be crazy to budget only for rates as they stand.

I'm surprised they'd accept only ISAs as repayment vehicles. Again, make sure you can definitely afford the repayment mortgage in the future, at a higher rate. I've lost count of how many people on here took on mortgages because they were sure that their circumstances would improve and that they'd have more money in the future and then find that life doesn't map out the way they banked on.