FTB Mortgage advice

Israfel

Hi all, I'm a first time buyer fervently looking through comparison sites and bank/building society sites looking for good mortgage deals. I can only put 10% or perhaps a little over (certainly not 25%) down as a deposit so my options are limited from the start however I've been looking into two different potential options and was hoping someone could help suggest which realistically is better...

Clydesdale bank offer a first time buyers mortgage with 10% min deposit fixed at 5.9% for 3 years.

However Natwest offer a first time buyer 2 year tracker mortgage with 10% deposit at 4.19% above the base rate so currently it would be 4.69% now before everyone screams blue murder at me about being caught if and when bank of england interest rates go up, theres an option to switch to a fixed rate after 3 months (if I've read everything right) which looks to be at 5.99% currently. Now with this option as well there'd be no product fee. This seems a pretty good option as I could stay on the tracker as long as it's below the fixed.

So basically, I'm very new to all this and trying to work out the best way possible. Any comments or thoughts on the above options would be really appreciated. Thanks

TrickyDicky

Me and the wife are in exactly the same position as you, <20% deposit and trying to buy somewhere.

Having looked around, the best we can find is HSBC - 5.99% on a fix for 2 years, or Base rate + 4.09%. There is a £499(fixed) or £999(tracker) fee though (but this seems pretty standard). The base rate will actually have to climb over 2% in 2 years for the tracker to start to cost more than the fix, because you will be saving at the start, which is then counter balanced if the base rate goes over the fixed rate. The fixed does make accounting easier though. What attracted us to the tracker though was the unlimited overpayments, which we can currently afford, reducing the loan term...

So, its up to you to either take the risk of the tracker or fix and have easy accounting...

Israfel

The unlimited overpayments isn't available on the fixed but that certainly makes the tracker an interesting prospect. Much like you I should be in a position to make overpayments. The only thing is tracker is a risk.

TrickyDicky

True, but its only a problem when the BOE base rate rises above about 2%, and if you're making overpayments hopefully your LTV should have increased to such a point that remortgaging provides a much better rate.

Israfel

True tricky but it's a gamble all the same, who's to say how quickly they may end up raising the base rate as it's reviewed on a monthly basis if I'm not mistaken. I have to say I'm playing with the same idea as you right now. btw, for reference I found two other building societys that are offering what seem to be decent quality fixed and variable 90% mortgages. Newbury BS and Furness BS. Worth checking out for comparison

Israfel

Just noticed this is in the wrong forum, could a mod move it to the mortgages forum?