Which co-op mortgage to choose - fixed or capped tracker

Thrugelmir

benjo wrote: »

In terms of overpayments, there are some really smart people on this forum who can advise by how much overpayments vs savings rates will gain you - Im not one of those.

All I can say is that it really is worth playing around with the overpayment calculators to see how much a difference even a modest amount makes.

Personally, if I could afford to pay off the full 10% each year, still having an emergency 'oh my goodness the roof fell in' savings pot and live a little - I would pay off the full 10% allowed.

Unless you are on a historically low mortgage rate product. Such as base rate plus .5%. You will always be better paying off debt rather than trying to make more interest on savings.

Remember mortgage interest is net. So if your mortgage rates are as follows, then you'll need to achieve the gross savings rates to be better off.

Mortgage 4% - Savings 5%
Mortgage 5% - Savings 6.25%
Mortgage 6% - Savings 7.5%

For higher rate tax payers the savings rates are even higher.

Keep an emergency cash fund though. Over sensibly and you'll reap the rewards in years to come.

If nothing else a lower LTV will enable you to obtain a more competitive mortgage.

benjo

See ^^^ Thrugelmir is one of the clever folk I mentioned - thanks Thrugelmir.

Thrugelmir

benjo wrote: »

See ^^^ Thrugelmir is one of the clever folk I mentioned - thanks Thrugelmir.

Not clever. Just happened to have worked in finance for many years! Useless at DIY !

Bean_69_99

@ OP - Just out of interest, where you from mate? Ive also got my co-op interview today and having exactly the same dilemma!

ALL - If i get the mortgage in principle today does it 'hold' the deal (therefore i have to choose which product iw ant today andi secure that rate for a certain period) OR do i just get the figure that we can borrow on the mortgage and have to get the mortgage to secure the offer / deal?

Thanks all

Matt

graham17_2

Hey,

I'm from Glasgow, so will be different unless you're from Scotland as well.

Still can't pick, haha. I just worry about taking gambles in case they don't pay off :-)

I really appreciate all the help people have been giving me, it's certainly very good help and food for thought. Wish I could decide.

Thanks again,

Graham.

Thrugelmir

graham17 wrote: »

Hey,

I'm from Glasgow, so will be different unless you're from Scotland as well.

Still can't pick, haha. I just worry about taking gambles in case they don't pay off :-)

I really appreciate all the help people have been giving me, it's certainly very good help and food for thought. Wish I could decide.

Thanks again,

Graham.

Take the option that gives you peace of mind. There's no right or wrong.

graham17_2

Thrugelmir wrote: »

Take the option that gives you peace of mind. There's no right or wrong.

Very good advice I must say. Puts it in perspective. I'd end up worrying about the other one watching base rates. I think I'll end up with the fixed for peace of mind.

Thanks again,

Graham.

nicnicnic_2

I am currently in the process of buying a house, and taking the 4.99% fixed over 5 years with the Coop.

Word of warning, they are extremely slow. It has taken them over 7 weeks to issue the mortgage offer letter, simply because I've been "in a queue" (not because of any problems).

Particularly irritating as I am not in a chain, and the vendor is not in a chain. The Coop have been the only party holding things up!!!

Jacka87

I am in a similar situation so really interested to here some of the opinions on here.

The peace of mind thing is always great advice but I am not sure it applies in this situation.

If it was a straight forward tracker v fixed then ye peace of mind cos the tracker could go through the roof and then you cant afford it and lose the house. In this case that wont happen as the tracker has a cap. Just make sure that you can afford the cap price assuming rates quickly hit that level and you have to pay that amount for say 4 of the 5 years. If you can afford it then there is no peace of mind issue.

Either way you will always say oh but could I have saved on the other type. If rates dont go up and your on a fix then you will say the capped tracker would have saved me money. If rates do go up and your on the capped tracker you will e saying oh wish I had fixed.

The point is so long you can afford the worst case scenarion its really just about making that extra little saving on your new home.

Tho just to point out I do agree that if your unlikely to get any sleep worrying about rate rises then please avoid normal trackers for peace of mind.

trynsave

It goes without saying that everyone has their own brain, although some may be more efficient than others. As a result everyone has to examine all scenarios and go with what they think is best.

Personally I'd go with the capped tracker option. Through experience I have found that the first couple of years of any mortgage are the hardest. In this situation if it meant that my costs would be low for a year or so and may rise after that I'd take the risk. You know for a fact that you'd be saving now, and only think that you might be paying more in the future. Unless you are unlucky enough to lose your job, and you shouldn't get a mtge if you think this a possibility, annual pay rises may cover the difference between the fxd and highest capped rate - if it came to it.

Good luck - you'll probably regret it either way, :rotfl:but I hope you don't.