Remortgage dilema

MW

I am thinking of changing my mortgage from Virgin One. At present the interest rate is 5.85%, and my loan is 291,000. Do I opt for a discount, fixed or tracker type mortgage? Any advice welcome. ???

Rafter

You should certainly be able to beat that rate, even by going for a different offset type product.

As for which you go for, it all depends on how long you plan to stay in that house, what direction you think interest rates will move in next and by how much and how often you can be bothered switching mortgages.

If you think there is a risk rates might go up a lot go for a fixed rate. Latest projections are that they have almost peaked though so this MAY be an expensive option?

A tracker moves with the base rates and can sometime have some sort of cap too.

A discounted mortgage simply has a lower rate for an initial period to try to encourage you to switch and hopefully stay with that provider once the discounted period is over.

Tables from the likes of moneysupermarket or money facts should be able to give you some idea of say the cost over the first 5 years if that is realistically how often you plan to change your mortgage.

Personally I like my offset mortgage from First Direct, even though I could probably do better with a discount mortgage and switch every few years.

Watch our for repayment penalties and fees which may offset any savings you make.

If you are not finding it tough to meet current mortgage payments, think about whether you need to fix your rate or whether you will risk the possibility that rates will rise.

Good luck.

R.