Fix or Tracker Remortgage?

Tonerrr

I'm currently going through a separation and remortgaging the house in my own name with a transfer of equity. House value £220k, remaining balance £140k, paying my ex £40k so full remortgage amount £180k. Fix ends August 31st this year (2026). I did get us a good fix in our joint name six months ago but obviously I now have to re-apply in my own name with the increased rates…

I've ran the numbers and I'll have around £500 a month spare for disposable income, this is less than I'd like but rather than have the turmoil of moving/fees/cost of purchasing new furniture etc, I'm thinking I'll fix for 2 years giving me room to sell in 2 years.

I'm usually quite risk averse, however looking at the current options, a fix with a no product fee for 2 years is c. £935 a month at 5.19%. Looking at tracker mortgage with a £500 fee, the monthly payment is £829 monthly at 4.29%. With it being such a short term I'm looking at, how much can the base rate reasonably increase in that time? Historically increases look to have been increases of 0.25% every 4-6 months. I'd need 4 increases to reach the rate of the fix.

I'm usually super conservative and would prefer to know what I will be paying, however it somehow seems like the tracker is a no brainer? It would leave me with an extra £100 a month and even if there are increases, they don't look like they'd go above (or much above) the fix rate and even if they did, I'd already have saved hundreds in monthly payments?

Apologies for the rant - I get incredible decision paralysis and I'm looking for someone to help sense check the maths here and make sure I'm not missing anything.

Appreciate any feedback - thanks!

Brie

Another thing to think about (should you not have enough already!) is what if you take the tracker but make the higher payment? So tracker at 4.29% but paying £935 a month - which you say you can (just?) afford.

Here's what I see for £180k over 2 years….

5.19% £935/mos = total interest will be £20013 leaving a total of £175700.

4.29% £829/mos = total interest will be £17009 (includes £500 fee) leaving a total of £174955.

So significant interest saved but not much difference in the end result.

4.29% £935/mos = total interest will be £16882 (includes £500 fee) leaving a total of £172072.

So crystal ball!! What would you prefer pay less and save £3k on interest with the tracker or pay more and save another £3k on the final balance - assuming the rate doesn't go up.

brown_crow

With the base rate held at 3.75% for four consecutive meetings and inflation trending down, a tracker at 4.29% with a £500 fee against a fix at 5.19% with no fee gives you an £800 saving over 2 years even before the £100/month lower payment. You'd need four quarter-point base rate rises to parity, which looks unlikely given current forward guidance. The tracker is the rational choice for 2 years.

feynman33

Based on what you posted the tracker looks better, but your numbers look off in terms of what rates are available. Have you used the best buy tool?

Also typically on a 180k mortgage you should consider a fix with a fee.

BikingBud

Go for the tracker and save the difference? Perhaps in a regular saver at best rate or a flexible ISA

If you have built a large lump sum you can pay that off before next period. If the rate goes up and you need to flex across the flexible ISA could be withdrawn.

Jemma01

I went for a tracker before and I remember that HSBC had no ERC which allowed me to fix if I wanted to without finishing the 2 year term. So your risk here is pretty low as long as no ERC.

Are you sure your bank won't allow you to keep the same fix but remove the ex? Have you spoken to them?