Tracker Mortgages

Horizon81

I'm looking at tracker mortgages and want a 75% loan to value. Borrowing around £80K.

My question is, why go for a 2 or 3 year tracker when there are lifetime trackers around at the same rates? e.g. ING direct do a 2 year tracker at base rate +2.04 or a lifetime tracker at base rate +2.15. When the 2 years is up you'd have to drop on the SVR or pay another fee to transfer it. But on the lifetime tracker, you're free to move at any time as there are no repayment fees, and if rates stay low beyond the 2 years then you gain by just staying on it and not switching until rates do rise.

What's the advantage of a 2 or 3 year tracker over a lifetime one, apart from about £50 less per year in payments for those 2 years?

luckyfool

There isn't really an advantage, though some lifetime trackers tie you in for longer than a 2 yr tracker (e.g. Woolwich). Of course relatively few people qualify for the First Direct/HSBC market leading products as they cherry pick, and equally going from threads on here ING Direct service seems to be a bit on the shaky side. For many people the best 2 or 3 yr tracker that meets their needs might be much better than the closest term tracker.

Horizon81

When you say cherry pick and on the shaky side do you mean they're super selective on who gets the deals? If so, what criteria do they look at? My age, employment etc. I thought if I had the deposit and proof of income then I'd be ok.

Also - how does the Woolwich tie you in for more than 2 years. By charging an exit fee/early repayment??

Sorry for all the questions! Why would you say a 2/3 year tracker is better than a lifetime one if youhave to pay to renew/change it every few years?

luckyfool

Woolwich term trackers used to tie you in with a 1% erc for 3 yrs on their term trackers, though I think its actually down to 2 yrs now apart from on their Offset term tracker.

HSBC and First Direct are well known for cherry picking their customers, by being very selective and conservative in their underwriting. e.g. low income multiples, very good credit history, straightforward properties etc. Also it appears that from other posts on here First Direct take 2 weeks plus to even get you an initial conversation and quote.

Everything else being equal if the rates are similar then I would, as you say, pick a term tracker over a short term 2 or 3 yr deal. Having said that there are only a couple of lenders offering competitive term trackers, and generally 2 or 3 yr deals come at much lower rates.

deankenny

dont touch tracker mortgages

Horizon81

Care to elaborate?

VT82

deankenny wrote: »

dont touch tracker mortgages

Chocolate fireguard springs to mind:

https://forums.moneysavingexpert.com/discussion/2642143

https://forums.moneysavingexpert.com/discussion/2620215

_Andy_

deankenny wrote: »

dont touch tracker mortgages

Another inane, moronic comment. Well done.

hillcats

deankenny wrote: »

dont touch tracker mortgages

Do tell us all your opinion, I am very interested to hear what you have to say and more importantly why you make such a comment.

I have had tracker mortgages now for at least the last eight years, existing details below ...

luckyfool

hillcats wrote: »

Do tell us all your opinion, I am very interested to hear what you have to say and more importantly why you make such a comment.

I have had tracker mortgages now for at least the last eight years, existing details below ...

Ouch, you must be regretting taking a tracker. If only you had preemptively taken DeanKenny's mensa level advice and fixed your mortgage. You must be kicking yourself.