fixed or tracker for the next two years?

araxes

Hi All

I'm entering the terrifying world of mortgages and am confused as to my best course of action. Would you go for 3.19% fixed for two years or 1.69% + base rate for two years? I guess it's all down to a judgement on what the base rate is going to do and opinion on that is divided...

Thanks in advance

Peelerfart

Hi araxes,

The world of mortgages isnt that difficult really,well for most anyway.

In order to get best opinion we would need to know how much the fees are and how much the mortgage is for.

spalding

It's crystal ball time all really depends if the interest rates goes up (as many people are expecting) and if so how much it rises.

Question you need to ask youself is could you cope if it goes up, or is the safety of the fixed better for you when your starting off

araxes

Thanks for the responses:

PF - Charges are 995 for the tracker and 500ish (995 minus 250 cashback and a free survey) for the fixed. It's for 135000.

spalding - As I'm getting a lodger I'd be reasonably well insulated against a rate rise within reason.

araxes

For what it's worth my broker is recommending the fixed 3.19, but I haven't yet quizzed him on why he's not keen on the tracker - I assume our interests are not perfectly congruent.

Peelerfart

Personally I would get details for a longer term.

You could potentially pay a grand, and in 2 years be in a position where you need to pay again.

araxes

I'm new to this and could well be mistaken but - aren't nearly all mortgage deals based on an initial 2 year period then back to variable? Are there many options for longer term fixed rates? My perfunctory search jsut now hasn't revealed much...

Peelerfart

A lot of the terms are longer than 2 years, 3,5 or even longer are available for fixes and some trackers are for the lifetime of the mortgage.

Sounds like you should do a lot more digging.

PF

araxes

thank you PF.

does anyone have a view on my actual question? thanks in advance

Radionotme

You've already got the answer - it's neither!

A fee of £1000 now is over £40 extra per month in payments, which is a lot. Far better to look at a longer term mortgage like a 5 year one rather than pay such high fees. The same fees will apply to a 5 year deal, but only equate to less than £17 a month then.

araxes

ok the cheapest 5 year fixed rate i can get is 4.5%, so for the first two of those years interest is 12,425 - as opposed to 8,750 for 2 years at 3.19% - plus the arrangement fee is twice the size so really in terms of a/f per month it's not that different.

so is the answer still neither? *emoticon*