Fixed or Tracker advice?

sonny_c

Hi, my 5 year fixed deal at 6.24% end's this month with Co-Op bank

My LTV ratio is 48% with balance of £57,000

I was looking at another 5 year fixed rate as always (fee free) on a repayment type again at 3.39%

But now I have seen the below on there website

Lifetime Tracker for Current Account Customers BOE + 2.09% (2.59% Variable). If I'm correct I can move to a fixed rate after 3 years without charges. However application fees for the new mortgage may apply.

I'm planing to make O/P to reduce the capital

Thrugelmir

Take the tracker and as you are saying overpay.

2% above base is a rate worth locking into for the remaining term of the mortgage.

kingstreet

sonny_c wrote: »

Hi, my 5 year fixed deal at 6.24% end's this month with Co-Op bank

My LTV ratio is 48% with balance of £57,000

I was looking at another 5 year fixed rate as always (fee free) on a repayment type again at 3.39%

But now I have seen the below on there website

Lifetime Tracker for Current Account Customers BOE + 2.09% (2.59% Variable). If I'm correct I can move to a fixed rate after 3 years without charges. However application fees for the new mortgage may apply.

I'm planing to make O/P to reduce the capital

Does it say anywhere "for existing mortgage customers not moving home?"

The products for customers like you may not be published widely and you may be looking at products for purchase or remortgage customers. Check before considering as a realistic option.

http://www.co-operativebank.co.uk/servlet/Satellite/1193206367104,CFSweb/Page/Bank-Mortgages

sonny_c

I should be fine

Existing customer looking for a new mortgage deal?
If your current mortgage is with us, we can offer you a range of great re-mortgaging deals and could find one that’s exactly what you’re looking for.

kingstreet

That's why I recommended checking. Changing products with the same lender isn't a remortgage as there is no change to the mortgage deed, yet they seem to describe it that way.

sonny_c

I see what you mean but I already have applied for the 5 year fix with no issues but not signed and returned paperwork.

Really liking the tracker deal and have worked out if BoE rates were to go up to 4.15%, assuming mine would go up to 6.24% that I can still make the monthly payments.

Thrugelmir

sonny_c wrote: »

I see what you mean but I already have applied for the 5 year fix with no issues but not signed and returned paperwork.

Really liking the tracker deal and have worked out if BoE rates were to go up to 4.15%, assuming mine would go up to 6.24% that I can still make the monthly payments.

You need to consider what interest rates might be when the fixed term ends.

Overpaying now (or saving instead) will get you ahead in financial terms if you opt for the tracker.

dimbo61

If you are comparing the tracker with the fix you only need a 1% increase in the BOE base rate within the next 5 years to be better off with the fix ?
So do you think interest rates will rise 1% during the next 5 years
Does the fix deal allow overpayments ?
Do you like the security of a long term fix ?
If you have been happy paying 6.24% for the last 5 years I would reduce the term so that you are paying the same amount each month as you pay now

sonny_c

Some very good points stated!

dimbo61 wrote: »

So do you think interest rates will rise 1% during the next 5 years ? Yes I would have thought so
Does the fix deal allow overpayments ? Both allow 10% overpayments and I think after 3 years with the lifetime tracker you can make max overpayments
Do you like the security of a long term fix ? Yes who doesn't
If you have been happy paying 6.24% for the last 5 years I would reduce the term so that you are paying the same amount each month as you pay now Good point I did look into this and there is a £50 fee to change term or I could setup a D/D to pay extra towards the overpayment

you've made the fix sound more tempting

dimbo61

If you pay £50 to reduce the term you can still pay 10% extra each year! but if you keep the term the same then you cant overpay as much.
This depends on how much cash you have spare each month and how you feel about clearing the mortgage ASAP?For me it was very easy.
Bank A wanted to lend me £120K and charge £80K in interest over 22 years.
I took out loan and then reduced term by 12 years ( cost £50) now I have more to pay each and every month BUT I save £50K in interest over the term. Yes £50,000 and I will be Mortgage Free in my early 50,s and not 65
Good for thought dont you think ?

sonny_c

I've been thinking and more thinking and having a play with figures. Spare cash a month stand's at £300. Little extra being put aside for emergencies

I'm concentrating on Loan 2 as it is a larger sum and longer term

Loan 1
£20K
3.39% 5 year fixed rate
Term 7 years and 3 months
Monthly Payment £268.25

Loan 2
£36K
3.39% 5 year fixed rate
Term 20 years and 2 months
Monthly Payment £207.15

If I pay £50 and reduce term, including my spare cash the outcome is amazing

Term Reduced to: 15 years - New Monthly Payment £258.09
Term Reduced to: 10 years - New Monthly Payment £357.85
Term Reduced to same Term as Loan 1 - New Monthly Payment £472.20

Not sure how much I would save on interest.
Thank's for my new plan of action! (now to tell O/H no holidays for next 5 years).