New build mortgage - fixed vs tracker

MissMayflower27

Hello,
We're currently buying a new build with 90% LTV - we've been to a broker and there are 2 deasl we can get, one with Santander and one with Skipton.

The skipton is a 2 yrs tracker, tracking at 4.38% above the BOE base rate

The santander is a 6.19% fixed for 2 years

there is £150 difference between the payments on the tracker and the fixed a month. If the base rate rose 1% the increase payment on the tracker would be 1%

So, we're just wondering which to go for - I know its a bit of a crystal ball question but just wanted to go for a guide as to what everyone thinks.

We don't need the merits of other mortgages, as these are the two we are considering, just whether opinion is its better to fix or track at the moment for the next 2 yrs?

Thank you

GMS

Nobody can answer this with any degree of accuracy. Rates will rise for sure but when and by how much is a guess.

This all comes down to your attitude to risk. If you are happy to take a gamble on payments rising then the tracker will work, if not go for the security of a fixed.

I suspect (personal opinion) that some time in the 2 year period the tracker rate will have gone past the fixed but that could be in month 24. I wish I knew the answer as it would make my life easier!!

MissMayflower27

I know, if only we could get an idea of how much it will increaase by it would make life sooooo much easier!

If it goes up soon i guess it eats into the savings we'd make from the fixed rate - plus would add more pressure to us in case it goes up a lot

ARRGGGHH - the decisions are too hard!

beecher2

Both options look quite poor to me, but that's down to it being a 90% LTV on a new build I suppose. Is there a longer fix available?

MissMayflower27

no, they were the best available when we went to see a broker

its hard to see whats available for a new build 90% LTV without a broker I think

We realise we're not in a great bargaining position but overall its the best deal for us to get our family house and get out of the negative equity we're in

CheeseCat

does it have to be a special new build mortgage? (must admit I dont know much about new builds as they arent my thing!)

If not I have recently applied for a 90% LTV 5 Yr fix with the Nottingham Building Society that is a better rate @ 5.69% (and I am preferring the security of the fix myself) Its a direct application only mortgage so maybe thats why the broker didnt specify?

I cant see anything on their mortgage rates pdf document about it not being applicable to new builds, sorry if this is useless info

MissMayflower27

we were told that a lot of lender won't lend 90% LTV on a new build

I'm not sure why, or if this is even true, just what we've been led to believe.

I'm not sure how we could even confirm this?

JSR

The Nottingham will do 90% LTV on new build houses (not flats!). So might be worth looking at. CheeseCat's deal is the same one I've gone for and the only fee is a £195 completion fee so pretty cheap, too.

JSR

P.S. it can be quite difficult to find a lender's criteria. The easiest way is to Google for it. You would think they'd put it front and centre.

http://www.thenottingham-intermediaries.com/pages/residential-lending-criteria

cd1986

we have just taken out a fixed rate with the Halifax for a new built. The bank of England base rate can only go up so i think a fixed rate is safer.

CheeseCat

Aha thanks JSR, I knew someone more knowledgeable would come along

The link to the rates is here Miss Mayflower;

http://www.thenottingham.com/downloads/LIT1070S_0510%20Fixed%20Rate.pdf

The broker might not have told you because you can only apply direct - so they don't make any money from the application. I guess it depends on the broker

Good luck let us know how you get on