Fixed rate or Tracker Mortgage

tmarzi

Hi Everyone

Im a bit stuck and was wondering for any expert advice.

My fixed term 4.44% mortgage deal is coming to an end in december 2010 after which it goes into a 0.75% tracker rate for the lenght of the mortgage life term.

Now, I know that the BoE cant keep the base rate at 0.5% for ever so I was wondering what the chances of it going up drastically i.e. from 0.5% up to say 4% within 2011?

I'm trying to workout whether to just leave the trakker rate and just monitor the interest rate or just go to a fix term now.

Any help is appreciated.

Thank you

Tony

sarah69696pink

I was in a similar position and have kept the tracker....whilst I know the base rate will go up, I'm chancing that it will go up slowly and not too fast and therefore will hopefully be better on this rate for a while.
I guess with mortgages whatever you decide is a risk...but I'm certainly hoping that the rates won't jump up too fast!

Person_one

It really depends on your financial circumstances, do you need certainty or you can afford to take a bit of a gamble?

No one can predict where rates will be in 4 years, but would you be able to afford your tracker if they went up to 8,9,10% or even higher?

Personally, I'm going for a fix as I'm a fairly low earner on my own so I need the security of it, and fixes will probably never go lower than they are now.

ginvzt

tmarzi wrote: »

Hi Everyone

Im a bit stuck and was wondering for any expert advice.

My fixed term 4.44% mortgage deal is coming to an end in december 2010 after which it goes into a 0.75% tracker rate for the lenght of the mortgage life term.

No one can say what will happen, but to be on a rate of 1.25% is very good. Yes, you cannot know how long it will last, but if you keep overpaying every month you will reduce your outstanding debt considerably. I think I would stay on tracker, but keep paying as much as I can (at least not reduce the amount that you pay now, increase it if you can)

Funkygibbon

If I was you I would stay on the tracker until the rates started to go up. But still pay what you are paying now. This will help you to lower your LTV which should mean that you get a better fixed rate in the future. (Only my opinion though don't forget!)

tmarzi

Thanks to everyone for such a quick response :-) I appreciate your comments. Well, I still have 3 months to go so we'll see if the BoE makes any sudden changes or may 'hint' on raise (if there is such a thing).

emeraldbugle

Which bank are you with? Does the current mortgage track the BoE base rate or one of their own rates?

If definitely the BoE base rate, then I'd stick with that. The last forecast I saw didn't see base rate any more than 2% by Q1 2012, but it is a forecast!

fraser

really difficult to call, seems the best fixes and products are getting harder to obtain at present (YBS and FD just changed their mortgage ranges by quite a bit)

tmarzi

Alliance and Leicester and the trakker rate is ONLY above the BoE base rate.

Joe_Bloggs

The described tracker an irresistible 'no-brainer'. You can afford to enjoy the risk of BoE rates rising if you have a cushion of savings to fall back on together with equity in the property.
Build up both equity and savings whilst your rate is low. Do not splurge away this windfall.

J_B. (Make your opinion Grate)

hillcats

We are on a tracker, and we are overpaying to clear the mortgage.
against what some suggest I know, but I am enjoying watching my balance tumble...