Need to decide whether to leave lifetime tracker that has served us well for about 15 years

Birdseed007

Lifetime tracker Mortgage with Barclays on an interest only basis of £329000 on a property worth around £700 000. The main mortgage of £290000 is on 0.17% over base for the life of the mortgage (currently 4.92%) while the further advance/overdraft part of the mortgage owes £39 000 and is on a rate of about 3% over the base rate so 8.75%. This can be reduced to the same rate as the main mortgage if we turn it back into an offset overdraft and pay our salaries in (which would make sense).

Mortgage will run for around another 8 years and our plan for repayment is to sell the house in SE England and move to a cheaper area to retire.

Unfortunately due to an extended period of ill health and being off work for 21 months we got ourselves into financial difficulty for the first time in our lives and ended up on a DMP for our credit cards and loans which by then were sizeable. We also ended up around 2 months in arrears on our mortgage and being about £3000 over our further advance overdraft limit.

We have been paying this plus our DMP plus arrears (around £1700 a month in mortgage and £700 for the DMP) however Barclays have offered us a 1 year fix at 4% on the main mortgage which would lower our repayments by around £300 a month in an effort for us to clear our arrears faster.

Now I'm aware that there's a chance that the Bof E and hence mortgage rates will fall next year, although probably only reaching 3.75% by the end of the year on current predictions.

Our tracker has served us very well for the past 15 years and I always swore it was such a good deal that I wouldn't ever give it up but I'm now tempted by the lower repayments on the fix which would certainly help us out...

We have a telephone consultation with Barclays this afternoon and I'm hoping to ask them for the weekend to think about it. I would really, really welcome some advice. We have been to financial hell and back over the past couple of years but thankfully I am now back at work aged 55 as is my wife aged 62. Our plan is to retire when she hits 67 and I am 60/61 if we can. I have a small side income from magazine writing but am an airline pilot for my main job - hence this is very medical dependent and isn't a job I particularly want to do in old age.

Very grateful for any advice on how to proceed.

Birdseed

ReadySteadyPop

I would expect mortgage rates to be rising not falling looking at the data at the moment.

https://theintermediary.co.uk/2025/01/virgin-money-increases-selected-mortgage-rates-and-adds-btl-exclusive-product/

amnblog

Are we saying Barclays have offered to put the whole borrowing on 4% which I make £1,130 interest only. Currently your interest costs on the mortgage should be £1,440. So a saving of £300. Sounds like it could be useful to you.

I can see why, when you were tracking a 0.5% base rate and paying 0.67%, this tracker product was valuable to you. Now with the cost having risen sevenfold the tracker has little to offer you. What you do need to avoid though is spending 12 months on a Barclays fixed rate to exit that rate with arrears and find that Barclays are then not offering you anything but their standard follow on rate (6.74%). I would consider a longer term fix if you can get one, perhaps a five year fix to take you to retirement?

The other point worth noting is that when your DMP is reviewed, is your saving on mortgage interest going to be swallowed up by an increase in your DMP payment?