Fixed or Tracker?

Arran83

Hi,

I have been given 2 options by my mortgage adviser, but I wanted to run it by all of you to see if you agree with his recommendation...

Both with Halifax...

Fixed Details:
2 Year Fixed @ 4.7%
Setup cost = £499

Tracker Details:
Not sure on duration.. but currently @ 3.7%
Setup cost = £999
£250 Cashback
Valuation fee's reimbursed...

He has recommended the the Tracker deal, but obviously I am concerned that interest rates could rise rapidly this year... Is that likely to happen?

Also a friend says the Cashback and Valuation fee reimbursement may only apply if I have one of Halifax's special current accounts whereby I'd probably spend £250 a year to have it...

I'm not even a Halifax customer currently, I do all my banking with Barclays...

Also I cannot find any information about this Tracker one with all the perks on the Halifax site...

So which would you suggest?

Thanks,
Arran

Gorgeous_George

The tracker sounds ok if rates don't rise. As we dont know what rates will do I think the fix is better. However, I'd never take a 2 year deal. Five years minimum, preferably ten.

GG

Arran83

Thanks for your reply,

My adviser has only ever mentioned 2 years, maybe thats all I can get being a first time buyer? The mortgage business is all new to me, and so much to take in...

Cannon_Fodder

The advisor only mentions 2yr deals so that he gets a regular turnover of repeat business = fees.

Shop around for a 5yr deal.

Alisonb1975

The deals he has suggested arent the best around either. I have been looking for myself and Abbey nationals rates I know that are better and some deals with no arrangement fee. You could also check moneysupermarket.com and see what is coming up as the best on there.

Arran83

Ah yeah that makes sense...

I shall ask to see if there are any 5 year fixed deals available...
So we're against Tracker at the moment then? Obviously interest rates are a worry the way they are, they can only really go up... and possibly past my 4.7% fixed...

Arran83

Alisonb1975 wrote: »

The deals he has suggested arent the best around either. I have been looking for myself and Abbey nationals rates I know that are better and some deals with no arrangement fee. You could also check moneysupermarket.com and see what is coming up as the best on there.

Yeah Halifax doesn't come up at all on moneysupermarket.com... I'm not sure if thats because they're not involved or they're poor products in comparison to the others...

I should mention I am buying on the Homebuy Direct scheme, so maybe that has something to do with it... He seems to think Halifax are the ones to go with....

VIGILANT22

changed my mind

Gorgeous_George

Arran83 wrote: »

Ah yeah that makes sense...

I shall ask to see if there are any 5 year fixed deals available...
So we're against Tracker at the moment then? Obviously interest rates are a worry the way they are, they can only really go up... and possibly past my 4.7% fixed...

Possibly - although my guess (and that is all that it is) is that they will stay low for many years. But, if you can't afford to take the risk, fix.

Trackers ain't going down.

GG

Penny_Farthing_2

We've spent a few weeks balancing good tracker/ fix deals and went for a fix in the end. In the last few days, unemployment has been reported as the lowest for 2 years and inflation figures were reported as higher than expected even despite the V.A.T. change. In Wednesday's Telegraph, unless they put their quotation marks in the wrong place, there was clear indication from Mervyn King that interest rates are set to rise sooner rather than later.

Also, having been badly stung by a 5 year fix I'd never go for a 5 yr deal agin unless I really had to because there was no slack at all in my disposable income. At the time we took it out, it seemed an absolute bargain and no one was predicting the fall in interest rates 3 to 4 years later. We'd have been far better off on a SVR.

Radiantsoul

I would say try for a longer deal than two years. You need to factor in the setup fees every time you remortgage, so unless you have quite a large mortgage it might be kind of expensive.