Lifetime Tracker or 2 year fixed rate tracker?

getmore4less

paulalawson wrote: »

thanks we want to stay with our current provider and these are our options.
2 year tracker 1.79% changing to 4.74% £499 charge
or
lifetime tracker 2.49% £499 charge

we have 15 years left on our mortgage and owe 77,000
thanks

paulalawson wrote: »

our rate now is 4.74% long term tracker

Base + 2% is not bad.

Using a 15y term

0. £77000 @ 4.74% £600pm(as you are paying £610 there is probably some rounding on term/amount)
1. £77499 @ 2.49% £517
2. £77499 @ 1.79% £491

Look at the 2 year position paying £600.
0. £69568
1. £66703 (full term 151 months 12y 7m)
2. £65672

Just over £1k difference.

if your lenders deals stay similar then another £500 fee so still £500 ahead but will they have a base+2% tracker or another short term deal.

Not that you can predict the future but what is the lenders history on fees/deals, if they have been consistant or do they yoyo.

paulalawson

thanks getmoreforless. Your time is appreciated.but I don't understand any of what you've said

Mortgage_Mark_2

Importantly, what are the Early Repayment Charges for the lifetime tracker? You don't want to tie yourself down for too long..

paulalawson

there is an early repayment if I leave within 2 years. £250 legal fees

ViolaLass

paulalawson wrote: »

thanks getmoreforless. Your time is appreciated.but I don't understand any of what you've said

If your level of understanding is such that you need someone to say "Take this deal" then you are unlikely to get the answer you want on this forum.

Go to a broker. It's what they're for.

paulalawson

Look at the 2 year position paying £600.
0. £69568
1. £66703 (full term 151 months 12y 7m)
2. £65672
Just over £1k difference.


this is the part I didn't understand
I obviously wouldn't choose a mortgage just on someone's say so.

sheffield_lad

I cannot understand why 10yr fix's are not more popular given the low rates currently?

I have just signed up to one, 10yr 2.94% £995 fee with Barclays.

For many who are already at the edge of their limits it offers long term security, it also gives others (inc me), the chance to borrow more on cheap money to obtain the house they really want.

paulalawson

sheffield lad you know have me thinking maybe a fixed mortgage would be better, now i am really confused which to go for lol

getmore4less

paulalawson wrote: »

Look at the 2 year position paying £600.
0. £69568
1. £66703 (full term 151 months 12y 7m)
2. £65672
Just over £1k difference.


this is the part I didn't understand
I obviously wouldn't choose a mortgage just on someone's say so.

The key point between the two choices is at 2 years with one option you just carry on with the other the rate goes up to a very high level, or you to change.

If you have paid the same every month then the difference in what you owe at that point is a critical piece of information.

if you take the lower rate you will owe approx £1k less(this is quantifiable)

We could also quantify how long on the higher rate you lose that £1k advantage.

BUt to change you may have fees to pay and you don't know what rates will be relative to your base+2% tracker(this is the woolly bit where the risks are)


Take First Direct a few years back they had loads of good rates and low fees, more recently they had the rates but fees were higher.

Your current lender wants £500now could be less or more in two years

Another approach some take is to give up the short term and go with the long terms only changing when a better long terms comes up. IMO base+2% or less is around the right rate to consider this option.

paulalawson

thanks that helped...my exit fee on the life time tracker is 250 if I leave before the 2 year point which covers legal fees