Lifetime tracker

Paradroid888

Hi all,

I've got two mortgages on my house:

1. Lifetime tracker, £72k. It's 0.98% above base however there is a floor of 2%, so it's costing 2.98% at the moment. The floor was lowered from 2.75% but could possibly be re-applied in future. Also it has a few nice features like payment holidays and borrowing back overpayments.

2. £58k which has reverted to SMR 3.99%.

Sorting out (2) is a no-brainer so I'm switching it to a tracker deal and saving £50 a month. I could do the same with (1) and save another £50 a month, but it's perhaps not a good long-term option.

But when there are 10yr fixed deals at 3.04%, does the tracker at 2.98% seem worth keeping? My gut feel says to keep it, if the base rate goes to 2% then it will start be competitive again, and 2% could happen in a few years. But it will effectively cost me £600 a year over switching with rates as they are now!

What do folks think? :beer:

getmore4less

Subject to affordability

Whats the best deal for your LTV with any lender, tracker or fixed.

2.98 seems very high for the current market and needs at least a 1% rise in base before it becomes competative(with the potential for another 0.75% on top of that.)

I think I wiuld be looking to move the lot if you can take the hit on not getting your overpayments back.

Paradroid888

I can get 1.79% on a tracker (1.29% above base), so like you say the lifetime tracker is not competitive.

Question is could I end up kicking myself for letting the base+0.98% rate go, when the mortgage has 24 years left to run?!

getmore4less

Using the savings now to overpay will likely compensate for the 0.3% premium if rates get to point your old tracker would be cheaper.

I can run some numbers for the 2 trackers if you want.