Mortgage decision: tracker now, fixed later?

MobileSaver

I'm trying to help my ex decide on the best mortgage for her. She's FTB, 30% deposit leaving £100k loan needed, can comfortably afford typical monthly repayments and is likely to make overpayments.

Obviously it's all a gamble but my gut feeling is that interest rates will stay low for maybe the next 2 years at least before starting to rise slowly.

So I'm thinking she could take out this HSBC Tracker for now, keep a close eye on rates every month for the next few years and then lock into a fixed rate mortgage as soon as it looks like rates will rise.

This particular mortgage has a relatively low fee, tracks at +1.99% (so 2.49% now), is portable, no ERC and very flexible on overpayments.

Sensible choice for her situation or have we missed something important?

firstaspect

It is likely that the interest rates will remain low for the next couple of years however I imagine that in 2 years time the fixed deals available will be a lot worse than what is around now. It's horses for courses really I think. I just got onto a fixed deal as even though I'm paying more at least I know there's no chance it can go up so I can manage the payments and any overpayments I want to do easier.

GMS

MobileSaver wrote: »

I'm trying to help my ex decide on the best mortgage for her. She's FTB, 30% deposit leaving £100k loan needed, can comfortably afford typical monthly repayments and is likely to make overpayments.

Obviously it's all a gamble but my gut feeling is that interest rates will stay low for maybe the next 2 years at least before starting to rise slowly.

So I'm thinking she could take out this HSBC Tracker for now, keep a close eye on rates every month for the next few years and then lock into a fixed rate mortgage as soon as it looks like rates will rise.

This particular mortgage has a relatively low fee, tracks at +1.99% (so 2.49% now), is portable, no ERC and very flexible on overpayments.

Sensible choice for her situation or have we missed something important?

The problem with this and any other tracker is that once rates start to rise and people decide to fix, the fixed rates may well have risen too.
Check out the fixed rates currently available and work out what the extra (if any) payment per month would be. From there make a decisoin as to whether or not it is worth paying for the security of a fixed rate.
Interest rate rises are something everybody has an opinion on, but nobody knows when they will rise. Nobody doubts that they will do at some point, but when is anybody's guess.
Do not let today's fixed rates influence a decision. There is no guarantee these rates will be available if and when anybody decides to jump from a tracker.