Discount tracker or fix

chelseablue

Our fix rate ends early next year. Best fixed rate we can find is around 5.60%

Or a discount tracker of 3% (which of course can go up and down) 

Going for the fix will cost us £400 a month more than the tracker. 

Is anyone going for a tracker and not fixing? 

I know the tracker can go up but if the rate did go up 1% or so the monthly payment still wouldn’t be as much as the fixed rate monthly payment 

MFWannabe

Ours is not up for another 3 years, but if it was up soon I’d go with tracker and ride it out to see what happens. With a fix you’d have an ERC if you wanted to get out of it and I personally wouldn’t fix at anything above 5% but that is my personal opinion 

K_S

@chelseablue I don't have an opinion on the fixed Vs variable question as that depends on your personal circumstances and attitude.

But I just want to point out some important differences between a 'discount variable' and a 'tracker'.

A 'discount variable' product gives you an X% discount off of the specific lender's SVR. This SVR can be changed by the lender at will and more often than not does not vary in line with the BOE rate. Almost all discount products come with an ERC that in most cases isn't too far off the ERC for fixed rate products. These are mostly offered by smaller lenders.

A 'tracker' product gives you a rate that is x% above the BoE rate. It varies exactly in line with the bank rate. About half of the lenders that offer tracker products come with no ERC, some with a low ERC. These are mostly offered by mainstream/larger lenders 

dimbo61

So what happens to your mortgage deal after the Fix ends ?
Does it go onto the SVR or some sort of tracker/discount deal ?

housebuyer143

dimbo61 said:

So what happens to your mortgage deal after the Fix ends ?
Does it go onto the SVR or some sort of tracker/discount deal ?

It depends what the terms conditions say. Normally you end up on the SVR.

chelseablue

dimbo61 said:

So what happens to your mortgage deal after the Fix ends ?
Does it go onto the SVR or some sort of tracker/discount deal ?

When the fix ends we move to their standard mortgage rate which is 5.74%

chelseablue

K_S said:

@chelseablue I don't have an opinion on the fixed Vs variable question as that depends on your personal circumstances and attitude.

But I just want to point out some important differences between a 'discount variable' and a 'tracker'.

A 'discount variable' product gives you an X% discount off of the specific lender's SVR. This SVR can be changed by the lender at will and more often than not does not vary in line with the BOE rate. Almost all discount products come with an ERC that in most cases isn't too far off the ERC for fixed rate products. These are mostly offered by smaller lenders.

A 'tracker' product gives you a rate that is x% above the BoE rate. It varies exactly in line with the bank rate. About half of the lenders that offer tracker products come with no ERC, some with a low ERC. These are mostly offered by mainstream/larger lenders 

Thank you. What one is the better one to go for out of discounted or tracker? 

Really not sure what to do. I’ve been reading a lot of the experts think the base rate might peak at 4% down from the 6% they were saying a few weeks ago 

IAMIAM

I think a tracker....if it peaks at 4% the max could potentially be 5% on a tracker then...equivalent to a fix...but with flexibility