Scary Tracker Rates BofE + 4.49%

VIGILANT22

anyone who cant afford rates at 5.5% ...cannot afford a mortgage....

hillcats

VIGILANT22 wrote: »

anyone who cant afford rates at 5.5% ...cannot afford a mortgage....

Hmmm yes, that's a tad iffy really.

I am still paying (+Over-paying) my mortgage at the initial rate payment it was when I took it out, which was around the 6% mark then.

I only need to be paying BofE 0.50% plus 0.19% = 0.69% minimum repayment.

See my signature for more info.

Thrugelmir

hillcats wrote: »

Hmmm yes, that's a tad iffy really.

I am still paying (+Over-paying) my mortgage at the initial rate payment it was when I took it out, which was around the 6% mark then.

I only need to be paying BofE 0.50% plus 0.19% = 0.69% minimum repayment.

See my signature for more info.

You need to watch your lender as recent events suggest that there is no guarantee as to whether lenders maintain such low rates. All mortgage contracts have exceptional contract clauses. Building Societies are now invoking these.

Although trackers are now far above BOE base. Once base rates normalise in the years ahead. The margin on tracker rates will narrow. Though how far will depend on LTV, lenders criteria etc.

adam_ironside

in defence of trackers, they often have very low fee's (or are fee free) unlike fixed rates which often have high arrangement fees. Also, trackers usually very flexible - mine was fee free 0.69% above base rate for life. I can make overpayments, can back out of it when i like and there is no early repayment fee.
I agree that 4+% above base is steep - however, if rates stay low for a while you will benefit from the savings compared with the fix (and not just the monthly savings, but also from not paying a hefty arrangement fee), and can back out free if rates start to rise - granted you might not be on as good a fix, but many economists believe that even when the bank rate goes up that fixes will not necessarily go up as quickly. So there is some logic to what they are doing.

I have saved a ton from my tracker and cannot see myself coming off it even if rates do go up.

hillcats

Thanks to all those who gave their opinion in this thread.
I can now provide an update, which I'm afraid is not good!

I was able to find a 3 year fixed rate deal at 5.99% and this was still not good enough as I was told that they can afford the rates to rise if they do, but in my opinion there is just not enough leeway here, (Why take the risk?) and they have now signed up so I am told to this tracker mortgage which is base (0.50%) plus 4.49% = 4.99% for two years, with only 1% leeway, silly in my opinion but it seems to count for nothing anyway nowadays, so I am not concerning myself with this anymore. Thanks to all anyhow.

mrcow

hillcats wrote: »

Thanks to all those who gave their opinion in this thread.
I can now provide an update, which I'm afraid is not good!

I was able to find a 3 year fixed rate deal at 5.99% and this was still not good enough as I was told that they can afford the rates to rise if they do, but in my opinion there is just not enough leeway here, (Why take the risk?) and they have now signed up so I am told to this tracker mortgage which is base (0.50%) plus 4.49% = 4.99% for two years, with only 1% leeway, silly in my opinion but it seems to count for nothing anyway nowadays, so I am not concerning myself with this anymore. Thanks to all anyhow.

Who is their mortgage company?

TrickyDicky

Hi

Im one of silly people about to take out a tracker on a 90% LTV at BOE + 4.09%. When we looked around it was 1.5% cheaper than the cheapest fix. But in our situation:

- We are planning to make overpayments from near the beginning (that is a significant % of our monthly mortgage payment). There is no limit on overpayments
- We could afford BOE going up to 5% with plenty of income left over
- There is no ERC and no tie in period. So the plan is to work the LTV to 75% asap and switch when the rates go up.
- We're reconing the rates wont go to more than 2% in a couple of years (thats the gamble). This is when a fix would have been cheaper for us over the 2 year period.


This is just our situation, not neccasarily hillcats' family member. If we didnt have the income we did, I would probably go for a fix.