48k Mortgage Tracker or Fixed Rate? (Repayment)

Keith:)

I have been curious about lifetime or term tracker mortgages...

Interesting and tempting I must say, the Woolwich use the term .17% above the Barclays Base rate yet all the rest say Base rate... is this a different rate?

lifetime Mortgages:

Britania 6.4% .40% above BR with charges of £499
Woolwich 6.1% .17% above BR no charges
C&G 6.14 .39% above BR with charges of £799
A&L are no where close
Nationwide 6.09% no fee

I am looking at options and they all seem pretty much the same, seems difficult to decide which would be right, fixed assures me of a set outgoing and the tracker will see changes monthly I would guess... other than that seems they arent a million miles apart. I remember the first time I considered a mortgage the first time the IFA was talking about putting me on a tracker then, with a small mortgage in todays terms maybe a tracker would be ok.

I cant see that fixed vs tracker would pay off the mortgage sooner, the attraction with tracker is no fees through the life which could be thousands in savings and hassle... oh well shall keep looking getting confused and hope I choose the correct one.

Thanks again for all your help and advice, it is appreciated!

Rikki

I am with the Woolwich and I have a life time tracker mortgage just above base rate.

I've had this for nearly 8 years now and I'm happy with it. I don't need to worry about looking to change my mortgage every few years. I've always wondered if I was to continually payout charges for fixed rates would they possibly wipe out the monthly savings I have made?

The monthly amount has increased but nothing too drastic, but if the rate drops at anytime the payments do go down straight away as they have in the past.

It suits me as I can make over payments too.

Keith:)

Rikki wrote: »

I am with the Woolwich and I have a life time tracker mortgage just above base rate.

I've had this for nearly 8 years now and I'm happy with it. I don't need to worry about looking to change my mortgage every few years. I've always wondered if I was to continually payout charges for fixed rates would they possibly wipe out the monthly savings I have made?

The monthly amount has increased but nothing too drastic, but if the rate drops at anytime the payments do go down straight away as they have in the past.

It suits me as I can make over payments too.

These are my exact thoughts right now, the Woolwich seem to be the best rate available at the moment (although the Barclays BR is still confusing me)... thank you for a positive for this option :-)

I am leaning towards the tracker at the mo but will wait for figures to be updated tomorrow or maybe even the 1st of sept, not sure when offers etc change.

Rikki

Barclays BR is exactly the same as Bank of England BR.

As I've said it just suits me. I like knowing what I'm paying out each month. Even with the increase its still within my comfort zone allowing me to make extra payments.

Personally I would struggle if I had to find the sort of money they are arsking for now to change my mortgage every few years. This money is better spent paying it towards my mortgage and not to the greedy banks.

A facture you may not have considered. In making overpayments you reduce the amount on capital you owe, which inturn reduces the monthly payments too. Not necessarily by much but the few pound aids as a buffer to the small increases in the interest rate.

Another thing you could consider is having part repayment and part interest only mortgage. In doing this you could make all over payments off the interest only part which I believe with the woolwich is not fixed at a % of the amount owing each year.
NB: If you do consider interest only part make sure you have life insurance in place and also have a saving plans to cover the amount outstanding at the end of term.

You are doing your research so I'm sure you will make the right choice for you. Good luck.

Joto_2

Hi Were in a similar position to Keith and have also been advised to go with the C&G (London & County) I would guess? We also have a mortgage of £48K and were considering lowering our term to 10 yrs. My husband keeps looking at the offset morgages and the figures look good but I don't really know enough about this option. Does anyone have any thoughts/ opinion of the offset mortgage? Thanks

Keith:)

Hi,

I have spoken with Woolwich and they have been helpful, looking forward to reading the paperwork as a couple of things they didnt explain well even though I questioned them they still were not clear, one of which was:

The payments will be the same each year and in September they will change, so what happened to changing with the BR, well they said it does just payments are reviewed annually is this normal?

So I got 6.1% APR can over pay by whatever I want and seems very flexible... just hope it pays off and rates go down by December next year!

Just hope I have done the right thing and it pays off in the end.

Thanks to all who offered advice it is appreciated

Rikki

Keith:) wrote: »

Hi,

I have spoken with Woolwich and they have been helpful, looking forward to reading the paperwork as a couple of things they didnt explain well even though I questioned them they still were not clear, one of which was:

The payments will be the same each year and in September they will change, so what happened to changing with the BR, well they said it does just payments are reviewed annually is this normal?

So I got 6.1% APR can over pay by whatever I want and seems very flexible... just hope it pays off and rates go down by December next year!

Just hope I have done the right thing and it pays off in the end.

Thanks to all who offered advice it is appreciated

This isn't normal on a tracker mortgage. I would ask them to explain this in more detail.

It maybe they haven't expressed themselves very well and mean it will always be x% above BR each year. September being when you get your yearly report.

Read it carefully and ask if there is something you need more detail on.

Keith:)

Rikki wrote: »

This isn't normal on a tracker mortgage. I would ask them to explain this in more detail.

It maybe they haven't expressed themselves very well and mean it will always be x% above BR each year. September being when you get your yearly report.

Read it carefully and ask if there is something you need more detail on.

I asked how come and how does it work, for example I asked if I am paying 6% in December and the BR changes to 6.5% tomorrow and doesnt take affect until Sept how much will I pay in sept and he just replied well if we changed everyones payment we would have to send out thousands of letters which is a huge admin overhead! I again challenged this and he just kept going round in circles on this one and in the end I just said will it be clear in the paperwork to which he replied yes!

I am taking the Lifetime tracker (details below from their website):

Lifetime tracker
Barclays Bank Base Rate + 0.17%, currently 5.92%, for the term of the mortgage. The overall cost for comparison is 6.1% APR.

• No application fee
• No early repayment charge
• Borrow up to 60% of the value of your home
• Minimum loan £50,000.

will read carefully guess they should train their staff a little better on this one he did say he had worked there since 2004 though so should be aware of this? unless its me misunderstanding him... but certainly he said my payments wouldnt change until Sept! weird

Keith:)

I am guessing he made a mistake:

Tracker rate - this rate is a set amount above or below the Bank of England or lender's base rate. The aim is to 'track' these base rates (whether they rise or fall). So you'll benefit from general interest rate cuts, irrespective of whether your lender decides to drop its mortgage rate in line with the base rate. However, if general interest rates rise, your mortgage rate will increase too along with your monthly repayment. There may be early repayment charges.

Rikki

Mines a lifetime tracker and I do get a letter every time the rate changes.

I think he's got it wrong. Just check the written word.