Lifetime Tracker or 2 year fixed rate tracker?

getmore4less

Unfortumately a lot of people miss out probably the most cruicial part of their analysis, what they will be owing at some point in the future.

They have some idea of to deal with the fees the monthly payment and use those to compare deals.

Then there are those that think that paying the fees up front is saving forgeting that that money could be paid off the other mortgage they are comparing against.

paulalawson

if you were me what would you choose?
We are quite happy to have a lifetime tracker mortgage along as interests rates didn't increase too much, or even the 2 year tracker. but we would like to make a saving on the actual mortgage payment as it is now. so is fixed the better option??????

paulalawson

i can get a 3 year fixed rate at 2.59% with no arrangement fees
or a 2 year fixed rate at 2,29% no arrangement fees, would this be better than a tracker mortgage ( life time tracker or 2 year tracker)

getmore4less

Not enough info.

One thing I would do if considereing long term trackers in the options is what is the best deal(that's not just rate) I can get now with any lender, if the idea is long term some inconvenience now will be worth it.

audigex

sheffield_lad wrote: »

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.

To give my personal view

Because the 3 year rate is better than the 10 year rate, and in 3 years I expect my LTV to be at least one band lower, which should give me lower rates. Essentially I'm gambling that the reduction in rates from a better LTV will outstrip the rise in the base rate in 3 years

I don't expect the base rate to rise by more than 1% in that 3 years, meaning if I wait 3 years and then lock into a longer fix, I can do so on a smaller amount and hopefully at a lower rate.

Basically I figure that even accounting for a rate rise cancelling out the improved rate from my LTV, this gives me 13 years at roughly the same rate as the current 3 year rate, rather than 10 years at the current 10 year rate, followed by 3 years at whatever rate we're at in a decade

Eg (rounding the numbers to make it a little easier)
- My current rate is 3%.
- I could get a 10 year rate at 4%
- In 3 years I expect to get a rate of 2% due to the better LTV ratio I'll have, as I'm just above a boundary and expect to overpay

This means that if rates stay as they are for 3 years (possible) I'll spend 3 years at 3% and 10 at 2%.

If rates rise by around 1% in 3 years (which seems likely), I'll spend 3 years at 3%, then probably another 10 years at 3%.

If I locked in now, I'd spend 10 years at 4%, then 3 years at whatever the rate is in a decade (albeit on a much lower amount)

Essentially, then, I'm banking on the 10 year rate for 60% LTV, being lower in 3 years than it is now for 70% LTV, or for a 70% LTV 3 year fix.... and using the 3 year fix rate now, which is cheaper than the 10 year fix rate.

At the end of the day we're all making uneducated bets about the state of the economy in 5-10 years.

If I'm wrong I might lose out slightly if the base rate rises by more than 1-1.5%. If I'm right I stand to gain fairly significantly, by saving 1% on my interest rate in the first 3 years of my mortgage (the most expensive) and potentially a lot more if I "win" on the 10 year rate.

amnblog

Paula


You need to engage someone to assess your situation and needs and give you some accurate advice based on your circumstances.