Additional Borrowing - Crystal Ball Needed!

grunnalls

I'm after some thoughts from others please. I'm in the process of talking to my current mortgage provider (Coventry Building Society) about some additional borrowing for home improvements following a sale which has unfortunately fallen through. I currently have a very good rate for our main mortgage which is fixed until 31/12/25 and has no ERC.

The options I am looking at are:

1) Tracker - Base Rate + 0.78% until 30/04/2025 (£999 fee and no ERC)

2) Standard Variable - 4.89% (No fee and no ERC)

3) Fix - 5.28% until 30/04/2026 (£999 fee and ERC)

4) Fix - 5.35% until 30/04/2025 (£999 fee and ERC)

As the crystal ball doesn't exist and the future being very uncertain, there are lots of predictions on what the BoE might do to the base rates. Some seem to think 4.5% will be as high as it might go, others predict over 5% and I've even seen suggestions it might only peak at 3.75%.

I'm swaying more towards option 1 as with the 2 fixes the base rate would need to go to 4.5% and over for it to work out worse. I like the idea of the SVR as it doesn't have a fee or ERC and increases to the rate will likely be less than the tracker but there is less room until a fix would work out cheaper.

Any help would be really appreciated. Thanks

silvercar

I’ve been happily on a tracker for the last decade, but as they say, past performance offers no guarantees! No ERCs means you can switch if the going gets tough.