Fixed rate or Tracker?

Beans27

Hi all, any advice from the intelligent people here much appreciated :beer:
I previously created a thread about which mortgage deal to change to, but I'm not sure how to find it. In any case, situation has slightly changed now - spoke to Natwest and they did a desktop valuation which increased the value of the house, so we now have a better LTV figure.


In a nutshell:
House value - £271k (according to the 'new' valuation, although that is hugely over optimistic in reality).
Mortgage - £170k
Current fixed rate deal of 2.28% ends in March.


The best new offers from Natwest are
2 year fixed rate (plus the product fee £995) @ 2.09% - brings monthly payments down by £12 a month
2 year tracker rate (plus the product fee £995) @ 2.04% - brings monthly payments down by £16 a month


So not much in it - my question really is whether there would be any point going with a tracker rate? I'd feel a lot more comfortable with the security of fixed, and I wouldn't have thought a tracker would be going down at all, 2.04 sounds low anyway?


I don't really want to start applying to other mortgage providers - situation has changed since we bought the house 4 years previously, my partner now has a poor credit rating and outstanding loans from a failed business.


Thanks in advance

dimbo61

So why are you looking at only 2 year deals ?
Will partners Credit rating be better in 2 years ?
Will interest rates be higher in 2 years ?
How much extra would a 3/4/5 year deal cost for security ?
If you plan on moving in 2/3 years then a 2 year deal maybe fine

Filo25

Personally I would be fixing for as long as I could in the current environment.

Beans27

There are a couple of 5 year deals, they are higher than the rate they are on now and honestly we can't afford any higher monthly costs, I was hoping to get it down.
I doubt his credit rating will be any better - he has a large loan that he is paying the minimum on, and I can't see that changing.


Filo, if you would fix for as long as you could in the current environment, presumably that's because you think rates are going to start going up? I don't have enough understanding about the financial market to hazard a guess. I'm hoping that in 2 years we will be in a better position (i.e. partner will have a regular income would be a good start!)

getmore4less

If you can't afford more(either higher rate now or rates going up) then your only option is to fix for 2y now to give time to sort out your finances.