Tracker mortgage? Any advice would be hugely welcome!

devonmaid77

Hi,

My husband and I (both first time buyers) are looking at two mortgages, one a 2 year fixed and the other a 2 year tracker, both with Abbey. Both have the same perks - free valuation, £250 cashback and both have the same arrangement fee.

The 2 year fixed is at 3.99% and the tracker at 2.85%.

We are in a position where we will be able to make overpayments to the equivalent interest rate of 5% (so on either mortgage we will be making an overpayment). We are just VERY nervous of committing to the tracker. Are we being silly or wise? We're just anxious because of the election coming up and the changes that may bring (good or bad), the fact that interest rates are so low now that they're only going to go up! However, we also realise that they would have to go up quite a bit before we would notice if we are making our overpayments anyway, and with the tracker we have a great opportunity to make regular and sizeable overpayments.

I just wish i had a crystal ball!

I know that no-one can be sure about what will happen to interest rates over the next two years and that the tracker will be a gamble, we're just interested to hear what others have to say before we take the plunge!

So any advice or opinions would really help us to have a good old objective look at the situation.

Thanks in advance.

VIGILANT22

So you haven't seen an advisor at Abbey then.........you're receiving information only service!..with a choice of mortgages!...

benood

When we were first time buyers we opted for a 2 year fix I think, in retrospect we should have gone for the tracker!

That probably doesn't help you much, sorry!

devonmaid77

No we haven't seen an advisor at Abbey, we are going through a separate advisor, who has talked us through what he thinks etc. Just wanting to get some other peoples points of view!

Oh and you asked about the restriction on the property I talked about a few nights ago for another problem - I said the restriction was s127, it is actually s157. Sorry about that!

devonmaid77

Thanks for your reply benood.

We know it's down to us to make the final choice. We have had some advice already and realise that hindsight's a wonderful thing and all that! Just wanted to get a feel for how other people view the situation, maybe give us things to think about that we hadn't already.

VIGILANT22

devonmaid77 wrote: »

No we haven't seen an advisor at Abbey, we are going through a separate advisor, who has talked us through what he thinks etc. Just wanting to get some other peoples points of view!

Oh and you asked about the restriction on the property I talked about a few nights ago for another problem - I said the restriction was s127, it is actually s157. Sorry about that!

Lucky you!!

S.157 HA 1985 is designed to give landlord authorities the opportunity to prevent dwelling-houses in National Parks (NPs), Areas of Outstanding Beauty (AONB) and designated rural areas from being sold as second or holiday homes to people who do not have a connection with such areas.

devonmaid77

Lucky because we haven't seen an abbey advisor or because will live in an AONB?

VIGILANT22

devonmaid77 wrote: »

Lucky because we haven't seen an abbey advisor or because will live in an AONB?

:rotfl:

Both!!......

If you want the security of a fixed think again about a 2 yr!...look more long term 5yrs....you have to think where will rates be in 2 yrs time, exit fees, new arrangements fees, maybe conveyancing & valuation fees...who knows .....good luck....

devonmaid77

Mmm, we have considered a longer fix, but have been trying to wiegh it up with the opportunity to overpay now while we can and knock a bit off the capital! Why are there so many options!

VIGILANT22

While rates are low instead of taking a 25yr mortgage why dont you reduce the term to say 20yrs...sometimes when you plan to overpay it never happens that way..ie....you decide on an inpromptu weekend away etc and the overpayment goes on the back burner...then if you take a 3yr for example...yr mortgage will be 17yrs..then...if you can afford to remortgage for 15yrs etc....amazing how quick you can get the mortgage down that way.....

devonmaid77

Thanks for that, we hadn't even thought along those lines, something to talk about over breakfast!