Fixed vs Tracker – Need Advice Before Completion (Halifax)

isotonic_uk

Hi all,

I’m looking for some guidance as I’m very close to completing a remortgage with Halifax (2nd Jan is the provisional date set), moving from a different lender, the recent base rate cut has made me reconsider whether I should switch from a 5‑year fixed to a 2‑year tracker. 

Option 1 – 5‑year Fixed

• Rate: 3.92%
• Product fee: £999
• Application/packager fee: £245 (already paid)
• Monthly payment: ~£1,123

Option 2 – 2‑year Tracker

• Rate: Base + 0.23% (currently 3.98%)
• Product fee: £1,499
• Application/packager fee: £245 (already paid)
• Monthly payment: ~£1,130
• Reverts to Halifax SVR (7.24%) after 2 years 

My thinking:

• With the recent base rate cut and the Bank of England signalling a “gradual downward path”, I’m wondering whether the tracker might be better value over the next 24 months.
• Even a 0.50% drop would make the tracker cheaper than the fixed over 2 years (after accounting for the £500 fee difference).
• A 0.75–1.00% drop would make it significantly cheaper.
• Worst case (no cuts): fixed is cheaper by ~£650 over 2 years.

Questions I have

1. Has anyone switched products with Halifax this late in the process? Was it straightforward?
2. I have called Halifax today and they need both the broker and all related parties to be involved however I did phone the convencying company and they can put a hold on the application however this will flip me over to the SVR with current lender and this would almost certainly delay completion beyond 2 January.
3. For those who’ve taken trackers recently, how have you found the flexibility to switch to a fixed later?
4. As part of this remortgage due to a major house renovation we planning on doing (planning application already in) we have taken a significant amount to fund this, my other concern now is how I distribute those funds so that the monies can actually grow for that short while until the extension works begin, my first instinct is top our ISAs up to the maximum but still have surplus to add in other accounts which I probably will consider something like the highest paid account where access to the money or even with a notice I can access.   

I’m comfortable with some risk, but I want to make sure I’m not overlooking anything before I speak to Halifax and my broker again. At the same time I also thinking whether its worth rocking the boat and just take the hit on the fixed and see where that goes. 

Any insights or experiences would be really appreciated. If I only did this when I started the application!

Thank you

kinger101

Nobody has a crystal ball in terms of interest rates.  While current consensus is probably they'll continue to fall slowly, there's always the unpredictable.

The real question should be do you have the capacity to take the risk of the tracker?  Or will you find yourself in trouble if interest rates spiked a few percent.

I can remember both my parents needing a second job (part-time bar work) to keep the roof over our heads in the 1980s.  Unless you have sufficient disposable income to take a significant interest rate rise on the chin, I'd value an easier nights sleep over possibly saving a small amount in the next two years.

You're essentially giving up the securing of knowing your mortgage costs for the sake on betting on interests rates going down.  

isotonic_uk

kinger101 said:

Nobody has a crystal ball in terms of interest rates.  While current consensus is probably they'll continue to fall slowly, there's always the unpredictable.

The real question should be do you have the capacity to take the risk of the tracker?  Or will you find yourself in trouble if interest rates spiked a few percent.

I can remember both my parents needing a second job (part-time bar work) to keep the roof over our heads in the 1980s.  Unless you have sufficient disposable income to take a significant interest rate rise on the chin, I'd value an easier nights sleep over possibly saving a small amount in the next two years.

You're essentially giving up the securing of knowing your mortgage costs for the sake on betting on interests rates going down.  

Thank you for the concern, as mentioned yes in terms of unpredictability and risk I can manage that. I guess the benefit of tracker also is its not tied in so I can make a judgement call when I feel is right that I either then go to fixed or another option. 

I take your point about no crystal ball on these matters but I guess just before I commit to a 5yr fixed I guess I just wanted to get some guidance on any options at this late stage and whether its worth it.

I think based on timings I personally think I will just stick with the fixed now, no point at this late stage to change but I was keen to get the community thoughts on this and really get any advice on whether anyone else has been through anything similar.

Thanks

Yorkie1

3.92% is, historically speaking, still relatively low. Over the last 16 years, my mortgage rates have been:
2010 to 2014 - 4.84%
2014 to 2019 - 3.19%
2019 to 2024 - 2.09%
2024 to 2029 - 3.99%