In the Current Climate

dosh1

WITH MY MORTGAGE......

Do I fix for two or five years or go for a tracker?

What would you do and why (give reasons)?

Thanks in advance

amnblog

90% of this decision is to do with your attitude to risk and your intentions for the property.

The other 10% is about rates available and guesswork as to where they are going.

If you are like most borrowers, you already know what you would prefer and just need that decision supported.

David_White

If you pick a tracker can you afford for the monthly payment to increase?

There's no guarantee of what rates will do in the next few years after all.

andyeb

I've just been through this dilemma myself. In the end I went with a 5 year fixed rate because:

- there's enough uncertainty around at the moment and I'd rather know what my payments are going to be for the foreseeable future. If rates go up in the next few years, we'll have some warning and can start preparing for rate shock at the end of the fixed rate period.

- in two years time we will possibly just be extracting ourselves as a country from the EU. Whatever you think about that, it's more uncertainty.

AnotherJoe

I would track assuming you can get really low rates compared to fix, and then take advantage of the low rates to overpay as much as possible whilst rates are low. . Rates are unlikely to be going up for some considerable time, and I see no benefit in being locked into the certainty of knowing I'm paying more than I need to for several years.i don't find peace of mind in that.

It seems as close to certain as you can get that rates will not be going up for at least 2 years, probably more, the U.K has no incentive whatsoever to make sterling stronger, a weak pound is better for the economy at present. So if you look at a a five year fix then for 2 or 3 years you'll almost certainly be paying more than with a tracker and a potentially lower rate for the last two years of the fix won't make up for that.

Of course it would help to know what the actual rates in question are, a five year fix at 1.5% would be better than a tracker at 2% but I'm assuming it's more likely to be the other way round

I absolutely would not take a 2 year fix as you will be paying higher rates on the dubious premise that rates might go up in the next few months when my cat knows they are only headed down,

dosh1

Thanks to you and your puddytat for your comments. :rotfl:

Current rates as follows:

5 year fixed = 2.53
2 year fixed = 1.74

Tracker = 1.64

I must say I hadn't thought much about a tracker but am now doing so. The tracker appears to offer a fixed and non-fixed for 2 years too. I guess it would be best to go with non-fixed if rates are likely to go down further.....?

Some food for thought (for me). I have until next Wednesday to decide, giving me enough time to chose the option online and sign paperwork etc. before new mortgage deal is in place on 1st August.

AnotherJoe wrote: »

I would track assuming you can get really low rates compared to fix, and then take advantage of the low rates to overpay as much as possible whilst rates are low. . Rates are unlikely to be going up for some considerable time, and I see no benefit in being locked into the certainty of knowing I'm paying more than I need to for several years.i don't find peace of mind in that.

It seems as close to certain as you can get that rates will not be going up for at least 2 years, probably more, the U.K has no incentive whatsoever to make sterling stronger, a weak pound is better for the economy at present. So if you look at a a five year fix then for 2 or 3 years you'll almost certainly be paying more than with a tracker and a potentially lower rate for the last two years of the fix won't make up for that.

Of course it would help to know what the actual rates in question are, a five year fix at 1.5% would be better than a tracker at 2% but I'm assuming it's more likely to be the other way round

I absolutely would not take a 2 year fix as you will be paying higher rates on the dubious premise that rates might go up in the next few months when my cat knows they are only headed down,

AnotherJoe

What about the fees associated with these mortgages? Any differences? On a 2 year deal the fees could be significant.

dosh1

Fees for all three are £995..... I would want to pay up front and not add to mortgage.

AnotherJoe wrote: »

What about the fees associated with these mortgages? Any differences? On a 2 year deal the fees could be significant.