Would you swap from fixed to tracker?

PeteHi

I'm currently on a 5 year fix with just over 3 years to go, paying £1250 a month (Early Repayment Charge will be circa £5k).

Looking at swapping due to impending new arrival next year and better deals out there than what we are currently on.

2 best options Ive found with my current lender are;
Tracker @ 3.14% (Saving £583 a month on my current repayments)
Fixed for 3 years @ 4.54% (Saving £298 a month on my current repayments)

I know nobody has a crystal ball and can tell when rates will go back up and to what extent. But before I take the plunge what would you do?

Peelerfart

3 years @ 4.54% (Saving £298 a month) is 36 x £298 = £10728-£5,000 = £5,728 profit.

That seems like a no-brainer to me.

As to the tracker option now that's trickier .Would need to now how much the mortgage is for and over how long,alsoyour attitude to risk and if you would overpay the mortgage with some ,if not all of the £583 savings.

PeteHi

yeah fixed is the sensible option, and what I've always been on. And correct it is a no-brainer, especially as I have just spoken to my lender they're willing to reduce the fee seeing as I'm an existing customer.

But the tracker is a huge saving! We wouldn't be overpaying, as Im looking at switching to reduce outgoings with a baby on the way and whilst my wife is on maternity leave. Once she goes back we'll be in a different position hopefully!

I'm leaning towards the tracker, and moving onto a fixed in a couple of years time. Surely they won't be much above the 5.89% I'm on at the moment by then? Won't there?

Peelerfart

"Surely they won't be much above the 5.89% I'm on at the moment by then?"

IMO - no, now where's that crystal ball gone ?