Remortgaging - Fix or Tracker?

ehtone

Hi

My fix deal is just about to come to an end, and i'm torn between getting an expensive 5 year fixed rate now or going for something like a lifetime tracker now, overpaying my mortgage with the money saved and then switching to a fixed deal when the rates begin to rise. My LTV is about 60%. Is this a good strategy?

Thrugelmir

The quicker you repay capital off your mortgage. The less you'll owe and the less interest you'll be charged. In addition the less future rate rises will impact you.

So your LTV isn't necessarily important as the amount you owe. As this may determine whether you are comfortable being on a variable rate.

Majority of mortgages are now charged interest on a monthly basis so overpaying has an immediate effect. Though it may not seem like much of a saving in the short term. The benefits will come in repaying your mortgage much sooner at some point in the future. So think of it as a marathon not a sprint.

ellives

Hi

I'm in a similar situation to you. Just about to come off of a 5 year fixed rate.

Have decided to go for a lifetime tracker with no fees or tie-ins (with hsbc).

I intend to over pay each month and take the risk of interest rates not going up too rapidly over the next couple of years - 3% by end of 2012?

So I agree with your logic but must say that if interest rates do start to go up more swiftly than expected, this will mean any decent fixed rates deals that you would switch to will be long gone - so do bear this in mind - you/we could avoid disaster but it will hurt some.

Hopefully the overpayments will help too?

I follow this site regularly - http://www.thisismoney.co.uk/interestrates

Good luck.

dimbo61

With 60% LTV you should be able to get a 5 year fix for under 5% which is a good deal if you look at interest rates over a long period of time.
If you got an offset mortgage and overpaid/saved like no tommorrow you could be mortgage free in a few years