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Tracker versus Discounted Mortgage?
dave321
Posts: 67 Forumite
Hi
I'm looking at taking out a new mortgage and considering a 3 year discount or a 3 year Tracker with the same society. The discount is 2.13 below the Building society rate and the tracker is 0.1 below the Bank of England Base rate. At present both discounted rates are very similar. Am I correct in thinking that this is always going to be the case as the Building Soc rate will go up and down with the Bank of England rate? - all be it with a lag then rates go down! Any other things I should be thinking about between these 2 different types of mortgage?
Cheers
I'm looking at taking out a new mortgage and considering a 3 year discount or a 3 year Tracker with the same society. The discount is 2.13 below the Building society rate and the tracker is 0.1 below the Bank of England Base rate. At present both discounted rates are very similar. Am I correct in thinking that this is always going to be the case as the Building Soc rate will go up and down with the Bank of England rate? - all be it with a lag then rates go down! Any other things I should be thinking about between these 2 different types of mortgage?
Cheers
0
Comments
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It's probably relatively academic, but i'm sure the purists on here will say the tracker product to remove the possibility of the lender not matching any base rate move with their SVR movement.
Historically there has been a history of SVR raising by more than the Base rate increase, but i'm fairly comfortable with either. Other features would probably be more important.
Hope this helps
SSI am a fee charging WoM Mortgage broker.I now no longer give information and opinion within the Mortgage boards, because a number of posters who, having approached me professionally, agreed my fee-which has been been made very clear at the outset, taken my advice (normally cancelling a [home visit] meeting at short notice) have then approached one of the fee-free brokers on here to arrange the very same deal I have advised.Whilst I totally concur with the ethos of "money saving"- abusing the goodwill of a professional who provides a quality service is taking it too far! :mad:0 -
SS
Thanks, makes sense.
Dave0 -
The margin between SVR and base rate can decrease, as well as increase. With some lenders, base rate linked products increase (or decrease) their rates more quickly than SVR linked products, so if rates are going to rise it's possibly better to be SVR linked.
I wouldn't personally get too excited about it - lenders cannot move their SVR ridiculously compared to base rate movements or they will lose too many customers.0 -
Thanks Marky, that's what I thought but just looking for extra independant advice, many thanks
Dave0 -
Whilst its true the market effectively limits outrageous changes in SVR compared to base, the banks / BSs are perfectly free to change SVR when and by how much they like.
At the last base rate change downwards, not all lenders dropped their SVR by the full 0.25%.0
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