Tracker or Variable

subzerostudio

Hello

I have the option of going for a tracker or fixed rate mortgage through HSBC.

Tracker rate is: 4.99% currently (base rate + 4.49), no booking fee. Overpayments allowed.

OR

2 year fixed - 5.99$, £599 fee. Hardly any overpayments allowed.

So I guess my question is - which to go for? How likely are interest rates to jump up more than 1% in the next 2 years? And if they do go up, how easy will it be for me to change the mortgage?

Kind regards

redpete

Interest ratres up by more than 1% in the next 2 years?

They might rise by 1% in 2 years time, but the real question is whether over the next 2 years will they be on average 1% higher than now - in my uninformed opinion unlikely. If you are planning to make overpayments the calculation is more complicated - taking into account the interest charges after overpayments, and interest you could have earnt on savings if you didn't overpay.

How easy for you to change the mortgage? Depends on many things, what the LTV will be when you want to change, what your credit rating will be when you want to change, what the early exit charges are on the mortgage, whether lenders are more or less likely to have better offers, ...