Option to switch fixed rate from a tracker

united4ever

Hi I am considering switching to a 2 year tracker with the nat west: 2.39% (no fees) The information states the following:

Option to switch to fixed rate?

All Tracker mortgages have the option to switch to a Fixed Rate from 3 months after the mortgage deal begins. There will be no ERC charged and a product fee at that time would be applicable.







Therefore, if, 3 months or longer down the line interest rates rise and the forecasts are set for more rises i could switch to a fixed with no penalty? Would this likely mean the term of the fix would have a matching end date to the two year tracker i originally chose or would it reset the clock or could i even choose for example a 5 year fix (again, all with no penalties). This sounds like a good option if there are no penalties.


The 2 year fix now would be 2.54% (no fees again). My ciurrent rate is 2.99% so I intend maintaining my current direct debit and overpaying a bit.


One final thing: if i pay a fee of £995 then the rates come down to: 1.59% for the 2 year tracker or 1.74% for the 2 year fix. My mortgage advisor said there was no point in adding an extra 1k to the mortgage by paying the fee but others have crunched the numbers and said it is better to pay the fee? Any advice?


One final final thing - with tracker rates - I guess when the BOE increases the rate the natwest will increase it almost immediately on my mortgage but when it comes down they sometimes may not honour that shift in BOE rate - is that right?



Thanks very much

united4ever

Anyone? Shameless bump:)

minimike2

You will be tied into the tracker, but the switch option allows you to swap to a fixed rate from the range at the time of the switch without having to pay the early repayment charges, but you will pay the applicable product fee for the fixed rate (if there is one). If it was a 2 year rate, the rate would last for 2 years from the date you switch (or until the advertised end date - they can be a few months more than the advertised number of years with some lenders).

On your second point - The payment of a fee depends on the size and term of the mortgage on if it is financially worthwhile paying or not. None of the mortgage advisors on this board are likely to answer this question as it constitutes mortgage advice. I have seen some non-advisors answer such things in the past but you are best leaving this to the professionals if you are not sure - Seek advice from a qualified advisor. Also worth noting that payment of a fee for a product and the addition of that fee to the mortgage are two totally different points which should be looked at in turn.

With your last point - It will be in the T&C's of the loan from Natwest exactly how rate changes are applied. It depends if the rates are BoE trackers or linked to some other mechanism. You will probably find details on their website, or again, seek assistance from an advisor.

united4ever

Many thanks for this. Understood. I shall digest this and make the decision. Thanks again.