Fixed vs tracker

MrsH78

I'm so sorry if this is a really stupid basic question... but we are moving onto a new mortgage product and have been offered 2 trackers (2 yrs and 3 yrs) and 3 fixed (2,3 and 4 yrs). Obviously the interest rate is lowest on the shortest term tracker (3.09). The 3 year fixed is 3.79 (lower than the product we have just finished of 4.29).

So which is best, the tracker is cheaper but could obviously increase - but the fixed one could have a negative effect because if the rate goes down (like it did this (3 year) period) we'd have lost out. OR does the over payment of interest in this case mean the capital gets more going to it?

No fees would be involved as we won't be moving provider.

Again sorry if this is beneath you all but had to ask and would appreciate any quick advice or suggestions.

Thank you.

Thrugelmir

Personally I would take the lowest available rate and overpay the mortgage. There's never going to be opportunity like this ever again to do so.

alleycat`

MrsH78 wrote: »

So which is best, the tracker is cheaper but could obviously increase - but the fixed one could have a negative effect because if the rate goes down (like it did this (3 year) period) we'd have lost out. OR does the over payment of interest in this case mean the capital gets more going to it?

No fees would be involved as we won't be moving provider.

Interest Rates go down to where exactly?
There isn't much scope for them to go down any further.
The question you are really asking is, when are rates going to go up and by how much (and nobody knows).

I understand there are no Fees but what are the limitations on overpaying and any tie ins on each product (for early redemption).

dimbo61

You also need to look at the follow on rate ? is it the SVR which the lender can raise any time they want!!!
What does your current deal revert to at the end of the FIX ? Read the OLD paperwork carefully and check with your mortgage centre if unsure.
Everyone has different needs and wants so a fix might be a great idea or a terrible decision