Help in choosing the right mortgage product in current market conditions while remortgaging

sonub4ualt

Hi all,

Looking for some advice on remortgaging as I’m a bit torn on what to do.

My current deal is 4.75% at £1,875/month on a £322k mortgage, ending in September. My lender has offered me an early switch with no ERCs, with options like:

• 2-year tracker /4.30% (/£1,790/month)
• 3–5 year fixed around 4.8–4.9% (~£1,880–£1,900/month)

There’s about a £90–£110/month difference between tracker and fixed.

I’m considering:

• Taking the tracker now (cheapest, more flexible)
• Waiting a few months in case rates improve
• Or going fixed for peace of mind

I’m comfortable with some risk but don’t want to make a bad call if rates go the wrong way.

Also thinking about releasing ~£10k equity to clear credit cards, but unsure if that’s smart long-term.

What would you do in my position? Stick with tracker, fix, or wait and shop around?

Appreciate any thoughts/experiences, suggestions welcome from anyone who is sharing the same boat.

ACG

Your considering all the options then 🤣

I cant really say what you should do as there are various factors to take into account.

But I have done more trackers with no ERCs in the last month than I have in the last 3-4 years. That being said, rates have come down in the last 4-5 days so I am yet to see what sort of effect that will have on peoples decisions.

I was on a webinar earlier in the month with an economist who said rates could go up, down or stay the same - a lot depends on how long this war goes on for and whether inflation beds in.

I was talking to my mate yesterday who is a product designer for a mortgage lender and he said there is a growing expectation that there will be a rate in Q3.

In short nobody has a clue. I think it all depends on one idio… I mean one man and what he wants to happen.

Altior

Unfortunately there are no shortage of idios. Some of them even organise state funded terrorism, randomly bomb neighbours etc.

But back on topic, when taking a fixed rate, your opportunity cost is the best case scenario, ie how far and how early do you think rates will fall during your selected term. Trackers or variable rates look at the opposite direction, ie the worst case scenario, how high could they go in the short/medium term. Therefore fixed rates are not a gamble, but there is a theoretical risk of fomo, an opportunity cost. 1% rates are not coming back any time soon, so what is the best case scenario?

I've posted about it on this board before, markets and policy makers are irrational ie politics override fundamental economics. On top of that, the UK effectively tracks the US base rate. However, there is no strong economic argument for increasing the base rate in the face of supply side pressure. 'We' don't have too much demand, arguably it's the opposite.

Yorkie1

If you want to borrow more than the existing balance, you may get asked to do a full affordability check by the lender. If you are just transferring from one product to another, with no other changes, there will be no checks.

This may or may not be relevant in your particular situation.