Probably yet another fixed or tracker thread :)

Dizzle77

Hi

newbie here. One of my mates referred me to this site.

I have a dilemma. I am currently on a variable rate at 5.59% and am looking to remortgage. I have been in contact with my Financial Adviser today and he has informed me of my options.

My aim is to get 75% LTV. This is dependant on the lender's valuation of my property and I will probably have to stump up around £4-6k of my own savings to achieve this.

The lending amount needed will be £139k over 21years.

Life tracker 2.89% (pay rate) Monthly payment £737

3 Years 3.69% with an application fee of £995 Monthly payment £797
4 Years 4.39% with an application fee of £199 Monthly Payment £844

The tracker that he is recommending to me allows me to switch to one of the lenders fixed rates at any time and penalty free. I suppose from that point of view, i could take advantage of lower rate now, then switch to fixed when I need to.

All the offers include free legal fees, free valuation and £300 cashback. The tracker also has no application fee

So my question is, should I just go for fixed rate for 3-4 years or should I go for the tracker? I like the sound of no application fee and the ability to move to fix rate whenever I like. my concern is that I will be limited to only the lenders fixed rates as I'm sure if I want to go elsewhere, I will incur a penalty.

What do you guys think?

Thanks

Thrugelmir

Your decision entirely which option to take.

If you can afford the 4 year fixed rate. One option would be to take the tracker and overpay by an additional £107 per month. Thereby accelerating your capital repayments.

Dizzle77

Yeah I realise it's my own choice, I just wanted to get people's opinions on something like this.

My concern with going for the tracker is that yes, I can get onto a low rate, but then if I want to move to a fixed rates later on, I will be restricted to only go with their own fixed rate deals. If I wanted to leave and go elsewhere, I would probably incur a penalty right?

Anyway, I have just emailed my adviser asking him what the penalty would be if I did decide to jump ship later on down the line.

I think I will probably go for it, unless there are any risks associated with it

getmore4less

Check all the penalties if that is a concern

Who are these deals with?

Do you need to fix, there are two main risks with a tracker and rates go up.
1. you end up paying more than you might have done.
2. your payment goes above the max you can afford.

Whats the max payment you could afford.

With unlimited overpayments you can mitigate 2 by by getting a longer term and overpaying more while you can.

What would I do : Tracker as long as there are not gotchas in the terms.

Dizzle77

I’ve since had some more info about the tracker.

This tracker is with The Woolwich. There is a penalty if I decide to leave within 2years. This penalty will be 1% of the original mortgage balance. My guy says this is pretty good as other places set this to around 2-3%, or in some cases 4%. So if I did want to leave within the 2 years, I would have to pay £1387.50 + admin charge of £275

I think I will also do the over payment thing also. Not much. Maybe about £200 while I can. The tracker is actually £215 less than what I am currently paying, so while I can still afford it, I should still try and pay that amount.

Aside from that I don’t think there are any other gotchas. I will ask my adviser again just to make sure.

Thanks for your help J