Santander lifetime tracker mortgage

isotonic_uk

Hi

I am a first time buyer and looking at some mortgage options, i am appealed by the Satander lifetime tracker, as the rate is 1.99 above the base rate which at the moment is 2.49.

Plus i can make extra payments as required with no penalty and can change at any time (if say the base rate goes up). Plus i receive cash back as i have a 123 account so get cashback for mortgage and bill.

Minimum term is 6 months.

Was wondering if other members have seen this, does anyone have this mortgage. Recommendtions, pitfalls? Anything else to consider.

Details are at this link:
http://www.santander.co.uk/csgs/Satellite?c=Page&canal=CABBEYCOM&cid=1368435119167&empr=Abbeycom&leng=en_GB&pagename=Abbeycom%2FPage%2FWC_ACOM_TemplateW2

Many thanks

redonion

If rates go up, will you get a much lower rate by remortgaging anyway? At the moment, good SVRs are 3% or more above base rate. When rates are higher presumably that number will fall, but with your tracker you've already got what, 2.2% above base? If you get a fix, rates going up over the fix period is not an issue. What you lose on a 5 year fix right now, apart from a slightly higher rate, is that you might have to pay a lot more if you have to move house. 2 year fixes seem pointless to me at the moment: rates seem pretty sure to remain low that long, so a lifetime tracker seems to win fairly clearly over a 2 year fix to me (unless maybe you can get one of the really low rates that then switch to a bad SVR, and are confident you'll be able to remortgage then at low cost).

After a fixed rate deal is up, it seems tracker mortgages will likely be available at the same or lower difference from the base rate, since historically when rates were higher the difference was as low as 0.5% as compared to over 2% now. On the other hand if lenders decides rates will stay low for a long time something like Japan, that could be wrong. Get your crystal ball out.

Re repayments: typically fixed rate mortgages allow 10% overpayments (i.e. minimum payments + 10% of principal at start of year, I believe). So the problem with ERCs (early repayment charges) is usually not that you can't overpay, but that you can't remortgage without paying out say 3% of the amount you owe, which is going to be 1000s. Instead, you're reliant on the lender to agree to "porting" for the period when the ERCs apply. Of course if you come into some money say from inheritance, ERCs may then be an issue even if you're not moving - but consider whether some of that shouldn't go into savings/pension/ISA investments etc anyway.

I've read comments here that Santander are difficult to deal with (delays, last minute problems). First Direct has a similar product (not available through brokers), but I've read that people have problems with them also. A newspaper survey indicated that 40% of property deals fall through because the seller pulls out. Could that happen to you? If so, speed and reliability of the lender is a real factor.