Fixed rate coming to end, whats the best option?

matte100

Hi,
Firstly thanks everyone for reading and in advance for your help.

Our 2 year fixed rate deal of 3.69% with First Active is just coming to an end. The mortgage rate will revert to 2.79% (2.29 over BOE Base rate) and will track for the life of the mortgage with no fees.

The mortgage balance is £146k with estimated property val at £230,000 (purchased for £247k in 2007). We have some savings so keen to get the LTV below 60% to get the best deal so have calculated we will need to pay £8k lump sum to get the 60% LTV. Having shopped around the best 5 year fixed rate is 4.49% with ING with no fees or tracker with HSBC at 2.39% (1.89% + BOE base rate) with no fees at the 60% LTV.

We are keen to reduce the term and balance as quickly as possible. We started with a 25 year mortgage 4 years ago but have now got the term down to 11 years as paying circa £1400 per month and made a number of overpayments.

If we were to go for a Tracker, it looks like it will be better to move to HSBC as there are no fees and no tie ins and is a better rate than the First Active rate once fixed rate comes to an end.

We have previsouly gone for fixed rates and were looking to do a 5 year fixed but the difference in rates has made us think about carefully. Whats the best option, fixed or tracker? What have others opted for?

Thanks for your help,

Matte100

dimbo61

The HSBC deal is one of the best on the market and it may prove tough to get Valuation, income, low LTV below 60% needed as they can cherry pick the best customers!
As for the 5 year fix thats more difficult as who knows what the market will be like in 2/3/4 years and 4.49% might be a fantastic rate!
Have you looked at offsets? as you can overpay and build up savings in the offset accounts!
YBS have a 5 year offset mortgage at 4.59% with a 25% deposit and fee of £95 but you have to pay fees to change lender.
We have just finished a 5 year offset fix with YBS but are now on a tracker with them that is too good to give up!
Your decision and good luck

matte100

Hi dimbo61, thanks for your reply. I have an offer from HSBC for the lifetime tracker at 2.39% (1.89% above BOE base rate). I've note looked at offsets as was either thinking fixed or tracker, but would consider. Whats your tracker rate with YBS?

dimbo61

We have a collar of 3% plus the rate set by YBS so not as cheap as some but I wont be worried if rates do start to climb for some time and we have savings in the offset account .
It has been for us a great way to reduce the debt