fixed or tracker!!!Help!

cgirl_2

Just about to move and take on a fat mortgage. Would like the stability of five year fixed, but rates high for the present climate but low in comparrison with previous years. Tracker 1.99% above base appealing as long as rates dont soar!

Seems mad to overpay by over £100 p/month just to have a fixed? Could I ride a tracker for the next two years at least?

Do you think fixed rates will go up?

Ahhhhhhh need to decide!:j

boliston

I vote for tracker, as fixed tend to have higher setup costs and higher redemption penalties. Some people like the "security" of fixed even though they will likely pay more.

cgirl_2

thanks. set up fee for tracker £999?

Peelerfart

You haven't stated what fix rate you have been offered ,neither have you given us the cost any fees that may be attached to either deal.

Also any tie ins on the tracker and how long is the term of the tracker.

In order to get the best of peoples opinions we would need this information .

mr_fishbulb

How much would the tracker need to go up by before you started having trouble meeting the payments?

boliston

Peelerfart wrote: »

You haven't stated what fix rate you have been offered ,neither have you given us the cost any fees that may be attached to either deal.

Also any tie ins on the tracker and how long is the term of the tracker.

In order to get the best of peoples opinions we would need this information .

Do trackers have specific "fixed terms" in the same way as fixed rated deals have a fixed term? I can understand a bank offering a specific rate for a fixed term, but surely a tracker will just ebb and flow in line with the base rate till the mortgage is paid off, typically in 25 years?

Peelerfart

boliston wrote: »

Do trackers have specific "fixed terms" in the same way as fixed rated deals have a fixed term? I can understand a bank offering a specific rate for a fixed term, but surely a tracker will just ebb and flow in line with the base rate till the mortgage is paid off, typically in 25 years?

Some trackers are for 2/3 years after that they revert to SVR.Some are term trackers,set up, as the name implies for the term of the mortgage.

Gorgeous_George

I'd take the tracker unless an attractive fixed rate was available (4.5% or thereabouts).

You need to consider... what if BofE rates stay the same, rise by 1%, 3% or 5% over the term of the mortgage deal? A rise of 1% could be considered likley whereas 5% may be unlikely. I'd be confident that rates probably will not rise by more than 3% over the next 5 years but, as always, it is only a guess.

The biggest risk to interest rates is the forthcoming General Election.

You pays your money and takes your choice.

GG

wodgerdodger

You don't always have to think about one or the other. many Lenders wil allow you to mix and match being part fixed or part tracker even some part 2 yr fixed part 5yr fixed just watch out for what fees they will charge.

My own preference if pushing myself slightly might be part term Tracker part fixed the proportions you need to work out for your self . The benefit of many Trackers are that they often are flexible or have flexible features which would allow you to overpay when you can and if things go the otherway then you can use the overpayment to take payment holidays or underpayments.

The important item to always watch out for is the arrangment fees charged. Not wishing to teach you to suck eggs but a flat £1500 fee on 200K loan over 2 yrs works out at an equivalent extra 0.75% over 5 years 0.3% . Also watch out for the follow on rates are they the Lenders SVR or is it a Tracker ?

edit: effective costs are for 100K loan.if 200k are 0.375 and 0.15% respectively

boliston

Peelerfart wrote: »

Some trackers are for 2/3 years after that they revert to SVR.Some are term trackers,set up, as the name implies for the term of the mortgage.

I must have a "term tracker" in that case as I'd hate the thought of being dumped on SVR (which is generally a rip off) after such a short time then have to faff about constantly renegotiating my mortgage deal.

stueyhants

Is it HSBC, I've just taken a 1.99 above base tracker with them ? I looked at three different scenarios regarding base rates over a 5 year period (Optmisitc, realistic and pessimistic). I would make about 14k, 7k, 2k savings versus a fixed 5 year mortgage so I thought it was a no brainer.

IMO base rates are not going to go up significantly for a long time, the government will first reduce the QE it injected before it raises rates so that should give forwarning about future rises.