5 Year fixed rate or term Tracker.

Myrtle0204

Hi all,

Just after your thoughts on which way to jump :0)

We are currently on SVR with our bank - came out of fixed a few months ago and are looking to switch for the best deal. They have offered us both a fixed rate for 5 years at 4.79% and a term tracker at 2.49% over base (so 2.99% at present).

No fees, or tie in on the tracker.

Its not quite the best we can find but the others want upfront fees which I dont want to pay (the one we were offered was 2.14% above base with £1500 approx fees) and only for 2 years.

The tracker is £200 a month cheaper than the fixed and by my reckoning it will take 7 x .25% rate rises to reach the same level as the fixed. Are my maths right ??

We over pay by about 40% a month and this will continue.

So you lovely peeps I need you to get your crystal balls out and advise us which way to jump :0)

Cheers muchly for any thoughts on this one.

I have to add that to my mind the tracker is the way to go but it just seems abit too good to be true and I suppose I am looking for things I haven't thought of :0)

Yorkie1

For informed response it would help to have an idea re. a) your attitude to risk / preference for certainty of payment, and b) whether either deal restricts the amount of overpayments possible.

Myrtle0204

Hi Yorkie,

Thanks for your reply. We have no kids (and none planned) so all income is our own, no other debt to speak of and we have savings ~(shares). So all things being equal could afford if rates go up.

The tracker is approx £100 less than the SVR and the fixed approx £70 more per month.

The fixed rate allows overpayments of 20% per month and the tracker allows any overpayment we choose.

I have read that rates are predicted (crystal ball time) to stay the same for the next 12 months and I am reluctant to overpay into the fixed rate until we have to. The trouble is (obviously) not knowing what rates are going to do - the beauty of the tracker is that we can convert to fixed rate (at potentially a worse rate) at any time but in the meantime we will have paid off more of the capital and the overpayments will further improve our LTV.

I hope that answers the questions :0) cheers again for your reply