2 year tracker.

blueste

We are remortgaging with our existing provider (Nationwide) as there rates are very competitive and they offer £250 cash back. We have £110500 mortgage debt with 16 years left and a LTV of 54.60%.
We are going to go with a no fee product, this offered us 5 deals. In light of the base rate cut to .25% we have decided to go with the 2 year tracker (base rate +1.24%=1.49%) our new deal will start on the 1st September. My feeling is that with the rate just being cut it is extremely unlikely to climb to .75% in two years, but may well be cut further in that time. With it being a tracker we could switch deals at any time if we felt the market was about to change. I should also mention that we intend to overpay by £200pm.

Other options open to us are. 2year fixed at 1.89%. 3 year fixed at 2.14%. 5year fixed at 2.29% and 10 year fixed at 2.99%

Any thoughts on our decision?

ed67812

My own personal view is;
A further cut in the base rate is possible and at the moment an increase unlikely.
Quantative easing and related monetary policy might see the prices of fixed deals fall, albeit not by much.
These push towards getting a tracker.


However,
There is potential for a fall in the market. So people may find themselves moving back into a worse LTV bracket the next time they remortgage. Not so much an issue for you at 55% or thereabouts.


I personally am remortgaging now and going for a tracker. I anticipate though moving to a fixed rate 5 year deal within the next year once I think rates have bottomed out. 2 year fixed deals seem pointless as you'd be remortgaging during the time that brexit is actually happening.


Just my thoughts. Nobody knows for sure and it really comes down to your risk attitude.

AnotherJoe

Any thoughts on our decision?

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That it's the right one for all the reasons you mention and that in 2 years time you'll probably do the same again and if you fancied a longer term fixed deal then it will be cheaper to buy then than now.

copperjar

Sorry to interrupt the thread, I too am looking at a 2 year deal - either fixed or tracker. With a 2 year tracker am
I right that you can switch any time? If so, why is it a 2 year deal?!

blueste

Correct, You can switch from a 2 year tracker at any time without penalty. The fixed part is the discount you receive on the base rate, for example my fixed is the base rate -.25% for 2 years, if I do nothing after 2 years I will revert to the base rate with no discount.

getmore4less

Check the fee based versions as well doing a proper like for like with your proposed payment.