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Which mortgage type?

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Hello there!

Looking for a 14 year mortgage and wondering what type to get either a Fixed Rate (for say 5 years) or a Tracker.

From a broker, we've been offered, in principle, a 5 year fixed rate at 2.29% until 31st October 2024.

Having looked on websites at other mortgages I can see that Halifax are offering a 5 year Fixed rate at 2% (3%APRC) whereas Barclays are offering a Tracker at 1.63% (3.6%APRC) for 2 years.

So I'm really not sure what would be best for us, especially looking at the future / Brexit etc. In my mind a Fixed rate would be best, however if the market goes down our interest rate stays the same but we can at least 'relax' for those 5 years, and not have to think about switching mortgages to get another deal after say 2 years; but then with a tracker, same applies, if interest rate drops so do our payments, if it rises so do our payments.

Any advice would be most appreciated.

Comments

  • djphig
    djphig Posts: 57 Forumite
    Part of the Furniture Combo Breaker
    Ultimately only you can make the decision. Couple of things to consider...

    Do you really think that interest rates are going to decrease? Given the uncertainty still surrounding Brexit can you be sure interest rates are even going to stay the same? Does the amount you save per month outweigh the comfort & peace of mind that your payments won't change? Are you planning to move in the next 5 years?
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    How big is the mortgage.
    What's the most you can afford monthly.
    Any plans move extend etc. that could require changes.
    LTV.
    What are the fees for each.

    Which lender did the broker suggest.
  • felinefancy
    felinefancy Posts: 108 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    We're looking at £130k property with £110k mortgage.

    No plans to move/extend etc.

    Example of fixed rates:

    Currently Halifax are offering 5 years fixed at 2% - £751.24 per month with valuation fee of £200 and arrangement fee of £995

    Yorkshire BS 5 years fixed at 2.13% - £757.81 per month with completion fee of £495 to pay

    Example of tracker rates:

    HSBC - 2 years at 1.64% - £733.25 per month and £999 booking fee

    The mortgage broker are using Nat West and quoting similar figures, however their broker fee is £1795, and then you have the bank's arrangement fee of £995 on top!

    We're comfortable paying £800 per month.
  • Have you asked the broker why he is using Natrwest not the Halifax. Could it be because Halifax mortgage is not available to you due to their criteria?
    The mortgage broker job would've not existed if it was just about cost comparison.
  • Cscott139
    Cscott139 Posts: 149 Forumite
    Third Anniversary 100 Posts
    Broker fee of £1795??? Go elsewhere as that is ridiculous.
  • Cscott139
    Cscott139 Posts: 149 Forumite
    Third Anniversary 100 Posts
    For a mortgage of £110k over 14 years I find it rare that paying fees to get the lowest rates works out worthwhile. I am sure there will be better value fee free deals that although don't have quite as competitive rate should work out better value.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Stay away from Halifax they charge more for mortgages under £100k
  • LRmortgage
    LRmortgage Posts: 484 Forumite
    Fifth Anniversary 100 Posts Name Dropper
    The broker fee does seem rather high!
    Is there anything specialist about your needs?
    Any adverse?
    Even then, £1,795 is very high.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    edited 24 July 2019 at 8:25PM
    In two years you can get to 75% LTV which can get better rates with some lenders.

    Unless you have issues 85% LTV should be easy to place and that fee is seriously high.

    You are also in the mortgage size you need to check fee no fee rates with lenders.
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