Barclays Lifetime Tracker or Variable rate with no ERC when moving in the next 6-12 months?

tamakaede

Hi there,

Just looking to see what people's thoughts might be on this!  We are looking to put our place on the market and move in the next 6-12 months but my current 5 year fixed rate (2.59%) comes to an end in September. 

I have been contacted by Barclays (my current lender) regarding switching to another rate or being automatically moved to their Lifetime Tracker.
I looked through all the rates available to me and I came across a 2 year tracker which has an application fee of £999 but has no ERC and the interest is 1.24%.  Do you think it would be better to just move onto the Lifetime Tracker at 3.59% until we move (we can afford the 1% increase in interest) or switch to the 2 year tracker?  

My initial thoughts were that we have the £999 for the application fee, the fact there is no ERC and cheaper monthly costs for now would be positives but just wondering if there was anything I hadn't thought of that needs to be taken into consideration!

Thank you!

EDITED to add: Barclays confirmed as it is just a rate change there will be no hard searches that would show up on my credit report.

Mobeer

Also consider First Direct - 2.24% with no upfront fee and no repayment charge - look for the "Life Tracker Repayment - Fee Saver".

grumiofoundation

So you are looking at 1.24% (plus £999) versus 3.59% - difference of 2.35%. 

If you are planning to move after 6 months you would need to have a mortgage balance of £85000 (85000 x 0.0235 = £1998 extra interest in on 3.9%,  so 6 months = £999) to break even after 6 months. 

So assuming your balance is >£85000 no brainer to switch. 

tamakaede

Mobeer said:

Also consider First Direct - 2.24% with no upfront fee and no repayment charge - look for the "Life Tracker Repayment - Fee Saver".

Thanks Mobeer - would I not need to get solicitors etc involved though to do this as it is a different lender?  And they would need to do hard search etc which I want to avoid when applying for a new mortgage when moving!  

tamakaede

grumiofoundation said:

So you are looking at 1.24% (plus £999) versus 3.59% - difference of 2.35%. 

If you are planning to move after 6 months you would need to have a mortgage balance of £85000 (85000 x 0.0235 = £1998 extra interest in on 3.9%,  so 6 months = £999) to break even after 6 months. 

So assuming your balance is >£85000 no brainer to switch. 

Thanks!  This makes so much sense when you set out the calculations like that!!  Our mortgage balance is currently just under £235,000.  I read and re-read the mortgage information sheet to make sure there was no ERC.  So even though its a 2 year tracker that means I can just switch to a different lender when I want to move (as I may not stick with Barclays)?  The mortgage is portable too anyway.

Do you think I need to think of anything else that might impact moving / applying for a new mortgage before switching to the 1.24% rate, aside from no ERC...?