To track or to fix? Your thoughts please!

devstar

Hi all, my current fixed deal is coming to an end shortly and have been looking around for the best deal. I was originally looking at fixing again for two years, but when i popped into HSBC, they told me about their fees free tracker at 0.99 above base rate (or 0.89 with plus account).

My dilemna now is should i go for this deal or just fix again. If i went for this deal, as stated, it is fees free so would not cost anything to switch (apart from exit fees) and would also not cost a penny to switch back out of this deal at any time in the future. With the BoE rate as it is, this deal is as good as any fixed rate, but without the fees.

I know it is always a bit of a gamble with trackers, but hopefully the base rate will only go down from here, but if it does start to rise again, i could just get a fixed deal at that time.

Does anyone have any thoughts on this? Any advice appreciated!

druss

Ok initial thoughts are.

1. The more you owe/have commited in outgoings in relation to your income affects the decision, if you feel that you could not sustain payments if the rates went up by say 1% I would consider the fixed.

2. If you have any plans to move home or you know your circumstances are likely to change then flexibility is more important than a fixed rate.

3. If you take a tracker now and try to jump to a fixed later it will usually mean more fees and the rate being offered at that time could be higher than is currently available.

Your right it is a gamble, one way you can lose money the other you could lose your home. As you can tell I like fixed rates as they do offer security.

Most of all will come back to spare income and your ability to cope with any increases in rate.

lisyloo

they told me about their fees free tracker at 0.99 above base rate

Woolwich are doing 5.74% but I think there is a valuation fee.
If you look into then please let us know the results of your research as I'm interested but haven't researched the fees fully yet.

but hopefully the base rate will only go down from here

Short term you are correct I think.
Longer term it's bound to go back up at some stage.

but if it does start to rise again, i could just get a fixed deal at that time.

Assuming you are avidly watching the news all the time and are able to get in before the lenders anticipate it and raise rates.
I think that's the main flaw with this lien of argument.
You might be right, but what if you happen to be on holiday or very busy or working abroad at the time without you finger on the pulse and unable to move quickly.

Does anyone have any thoughts on this?

You are right that long term it's a gamble.
I've gambled myself short term and done ok but on the whole I don't think we can expect to beat the banks at their own game.
Personally I would concentrate on your cirucmstances.
If you are stretched and a couple of % would really hurt then go for a fix.
If you are not risk averse and not streched then a tracker looks good to me.
So basically it comes down to your finances and attitude to risk.

Personally I think it's not clear cut at the moment and I'm probably going to go for a tracker (partly becasue my term is 8 years and doesn't fit into the usualy timescales of 5 or 10 years)

devstar

Thanks for the replies! I think i would be able to accomodate a 1% rise if that was to happen (not that i'd like it!). I understand what you mean about having to keep a sharp eye on the news and rate changes etc. I will have to have a look at the Woolwich, thanks for the tip!

Overall, i guess i'm gonna have to have a real good think about it, although the tracker is tipping the balance at the moment! Lets hope the rates do go down!!!

devstar

Just checked woolwich. Unfortunately for the 5.74 rate you can only borrow up to 60% of the value of your home. I only have around 85% at the moment so would be looking at the 6.29% rate. Thanks anyway!

Peelerfart

Just completed to a tracker with HSBC and I have to say it was very painless.

The way we pay our mortgage is to overpay x£ each month thereby effectively,unless rates rise dramatically,providing our own fix.
If rates go up we overpay less and the opposite if they go down.

I have to admit it is nice to be able to afford to do it this way but it has made a big difference to our mortgage amount over the years of low interest rates.

devstar

Yes, that is another good point and good idea to make. Overpayments can be made, and are unlimited. I think setting it up the way you have is a great idea, so that whilst interest rates are as they are, the mortgage is getting paid off quicker, but if the rates go up, it won't be as much of a shock to the wallet! Thanks!