discounted tracker vs fix?

economiss

we have a 290k mortgage on a tracker at 1.25% above base rate ie 1.75% currently. We have been offered a 5 year fix of 4.69% with a 1k booking fee and we would have to pay an ERP of 3k on the tracker. I know none of you have crystal balls, but any ideas or even gut reactions!!! appreciated.
Grateful thanks for your time.

northerner79

Gut reaction, leave well alone, but I don't know your situation, can you take the risk? How long is left on your tracker deal, so there will be no erp? You should according to all reports have at least another 12 - 18 months saving fortunes on the tracker deal in comparison, I think even longer! But it's a calculated gamble, can you afford to take it?

economiss

Thankyou so much for responding! it's a lifetime tracker- I think the ERP is payable for another 18 months. we could afford to pay 2 or 3 times what we are paying now- on an interest only basis if the rates shot up, but repayment basis would be a different ball game altogether...I am concerned that the base rate could be 5% by 2011 again....?

Treadmill

You'd be crazy to pay a 3k fee plus arrangement fee to move on to a much higher rate, stay as you are and overpay, my gut feling is that the base rate will stay low for long enough for you to save a lot of money.

getmore4less

economiss wrote: »

we have a 290k mortgage on a tracker at 1.25% above base rate ie 1.75% currently. We have been offered a 5 year fix of 4.69% with a 1k booking fee and we would have to pay an ERP of 3k on the tracker. I know none of you have crystal balls, but any ideas or even gut reactions!!! appreciated.
Grateful thanks for your time.

lets say rates stay low for 18m

£294k @4.69% over 15y is £2277pm and after 18m you owe £272,989.54
£290k @1.75% paying £2277pm and after 18m you owe £256,209.57
if they go up 1%
£290k @2.75% paying £2277pm and after 18m you owe £260,404.18

Save the £4k and overpay as if you had fixed.

The longer they stay low the higher the rate can go before you are worse off over the 5years.

Peelerfart

Agree with above ,it would be silly to let that deal go.

Stay where you are.

economiss

Thanks Guys,

I think you've all answered in the way my gut feeling was telling me.

I really appreciate your input!

I wonder what the heck the market is going to do next though, I wish I had Mystic Meg's powers!

Thanks gang, what a great community. x
:beer: