Fixed or Tracker?

diddlyDee_2

My Fixed Mortage is coming to end in June. I have roughly 170000 left on the mortage. I dont have the option of changing Mortage Lender as I am not in the country at the moment so it would be diffcult to manage.

I have been quoted the following options from my current Mortage Lender:

5 Year Tracker bank of England + 2.19%(Currently 2.69%)
Booking Fee: £999-00

5 Year Tracker bank of England + 2.69% Rate Floor of 1.5% (Currently 4.19%) -this option is not good that i know.
Booking Fee: £999-00

2 Year Fixed @ 4.09%
Booking Fee : No Fee* will be repaid at completion of Mortage

5 Year Fixed @ 5.19%
Booking Fee : No Fee* will be repaid at completion of Mortage

Im leaning towards a 2 Year Fixed @ 4.09% but worried when comes to its end the rates will be very high.
I also thought about the 5 year Tracker @ 2.69 % but rates will have to rise at some point? In saying that everyone thought they would rise in 2010 but nothing happened.

Most advice ive seen on the net indicates getting a 5 year fixed with at a good rate but my lenders 5 year fix isnt the best!
Will the bank of england rate rise to 2% in 2 years ?

Any advice/thoughts suggestions are very welcome as im struggling to make a decision here!

Thanks
D

hcb42

I would also take the 2 yr fixed at 4.09%, but that is because I hate paying these product fees, and not as I have done the maths for you...nor do I know your mortgage term

I in fact just did remortgage for £160K over 15 years on a 2 yr fixed with no fee, 3.28% and £300 cashback, so I am not answering this one hypothetically as it were.

Ultimately it is a question of doing the math, and what degree of risk can you live with.

diddlyDee_2

Thanks for the reply hcb.
The term is for 23 years.
Even If I do the math trying to factor in the possibily of base rate rises and by how much is difficult.

I have read that some experts believe the rate will be upto 2% by dec 2012 and 3% by Dec 2013. Therefore the tracker would be rather risky but if the base rate sticks around 1% for the next 1 year or 2 it would be worth it.

I wish i had gone on the tracker 2 years ago instead of a 2 year fix! But was worried the base rate would climb as people thought it would.

Man this is tough !

Astara

I know exactly how you feel! I've just decided to go for a 2 year tracker at 2.59% over the base rate with a £999 fee and now I'm thinking I should have gone for the 3 year fixed at 4.54% with no fee. I did say to myself that I wouldn't pay a fee again!! It's difficult!

hcb42

It is tough, the only thing we would all agree on is we wish we were on a tracker 4 yrs ago.

If you look at worse case reasonable scenario, and can afford that albeit begrudgingly, take the tracker, if you would rather have security, but accept you lose in the short term, take the fix....

diddlyDee_2

hcb42 wrote: »

It is tough, the only thing we would all agree on is we wish we were on a tracker 4 yrs ago.

If you look at worse case reasonable scenario, and can afford that albeit begrudgingly, take the tracker, if you would rather have security, but accept you lose in the short term, take the fix....

If only we knew how long the "short term" was