Woolwich Lifetime tracker 5.74% - any good

coconurtaler

Our Halifax tracker (currently 5.29%) finishes 31st July so we have been looking at a new deal.

We have about £68,000 outstanding split £28,000 interest only and £40,000 repayment. The length remaining on the mortgage is about 12.5 years but there are endowments finishing March 2010 which should cover the interest only part.

As we have the endowments finishing in less than 2 years we don't want to be subject to any early repayment charges.

The Woolwich Lifetime tracker at .74 above their base rate looks good to me as it also has no application fee.

Any opinions? Are there likely to be any better deals?

Thanks.

Joyful

I took this out in January. All done quickly with their Solicitors and I was kept informed all the way through- no charges. I can overpay as much as I want with no penalties. They only change the rates once a year so if the interest rate goes down you pay the same amount but clear mortgage earlier. I have just set up a standing order to overpay and will remember if the interest rates go up to increase this!

xSteve_2

Hi Joyful, what happens if the rates go up? Do you pay the same but effectively more of it is interest?

lisyloo

so we have been looking at a new deal

Re-mortgages can take up to 13 weeks so you might not now get it done by end of July.
This depends on how busy companies are e.g. when a valuer can get out to you etc. but you may end up being on SVR for a few weeks.

Any opinions?

Make sure you factor in fees.
I think there is a valuation fee with this one and it's not cheap, so make sure you factor in the any legal, application, valuation, exit fees, CHAPS fee etc.
I haven't researched this fully yet, so would appreciate you posting your results if you do.

Are there likely to be any better deals?

I don't think you will find much better.
There are some 5.99% deals out there e.g. First Direct which is why you should check the fees, so there are some in the same ball park but nothing a lot better than this.

what happens if the rates go up? Do you pay the same but effectively more of it is interest?

This trakcs the Barclays rate and not the Bank of England rate, but a Barclays rise would almost certainly follow a BOE rise.
At the oment I don't think rises are likely.
If rates go up then you will get a letter stating that your direct debit will increase to cover the extra interest.

_Andy_

Joyful wrote: »

They only change the rates once a year

If you're referring to the same product this isn't the case, as is evidenced on the KFI -

"Changes in our Base Rate made during the month will take effect from the 1st of the following month"

lisyloo

Changes in our Base Rate

Just to be totally clear, this refers to the Barclays rate and NOT the Bank of England rate.
I think it's fair to say that rise in BBBR would follow a BOE raise but the converse is not necessarily tue.
A cut in BOE rates will not necessarily be passed on in ful.

If you want a Bank of England tracker then make sure you get one.

The banks can effectively set their rates to whatever they want.
In practice they are constrained by competition but there is no direct link.

My understanding is that Bank of England rates are expect to fall, but there is currently a conflict between rising inflation and a slowing economy, so it's not clear when cuts will come.

payless

Bank mortgage standard rates (SVR) are not usually tied to BoE rates( So theyt can play funnies ) But Bank base rates ( as opposed to finance house rate or Libor) are very unlikely not to follow.. and given its a penalty free option people could/ would move if they did not move BBBR in line with BoE.. remember Bank Base Rates aren't just about mortgages.. so a major bank not moving its base rate in line with BoE would be a REALLY BIG THING

anyway see http://www.woolwich.co.uk/mortgages/mortgage-glossary.html

Barclays Bank Base Rate
Barclays Bank Base Rate follows the Bank of England Base Rate, which can go up or down and is announced by the Bank of England's Monetary Policy Committee every month.

lisyloo

But Bank base rates ( as opposed to finance house rate or Libor) are very unlikely not to follow.

I think your quite wrong here (sorry friend).

There have been many cases lately of banks either putting up rates, not passing the cut on in full or not passing the cut on at all.

Let me know if you want links.
One that springs to mind is Standard Life - ok maybe not one of the biggest players, but there are many more examples if you want them.

I stand by my warning to say that - If you want a BOE tracker then get one.
I don't think a lenders rate is that big a risk, but it's definitely one that should be recognised.

This is a couple of years old but it's the sort of thing I am referring to.
http://news.bbc.co.uk/1/hi/business/4155604.stm

There have been plenty of more recent cases during the recent credit crunch.
Bit busy but sure I can find more if you need it, but that should be enough to show want I mean in case we are talking at cross purposes.

so a major bank not moving its base rate in line with BoE would be a REALLY BIG THING

Regardless of your definition, really big things are not out of the question (northern rock, bear stearns etc.).

payless

As I mentioned their are differences between a lenders mortgage rate ( and their not having to cut it in line with BoE) and a UK Clearing Bank's base rate ( and hence mortgages linked to that rate)

Plus in Barclays own glossary they say the 2 are linked

Barclays Bank Base Rate
Interest on tracker rate mortgages is charged at a set margin above or below or equal to the Bank of England Base Rate. Interest rate changes on existing tracker rate mortgages take effect from the first of the month following a change to the Bank of England Base Rate. All references to the Barclays Bank Base Rate in your offer document (where the reference is to 'Barclays Bank PLC’s Base Rate') and Key Facts Illustration document (where the reference is to 'our Base Rate') should be taken to be references to the Bank of England Base Rate.

http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=articlegroup&site=pfs&value=6228&menu=3889

But would love to see any link you have that implies a bank ( or building scoiety) has not changed the rates on its "tracker" mortgages for existing borrowers . Think you will find they may have changed their mortgage SVR * SVR is often the follow on after a period tracker- although not an issue on a term tracker) differently OR changed the tracking difference for new customers.

lisyloo

But would love to see any link you have that implies a bank ( or building scoiety) has not changed the rates on its "tracker" mortgages for existing borrowers .

I think we may be talking at cross purposes.
A BOE tracker legally has to track the BOE rate - it's in the contract.
I'm sure you could sue them and win if they didn't do what they were obliged to do.
An SVR tracker does not have to track the BOE rate.

So it certainly is the case that some SVR trackers have not followed the BOE rate.
This has shocked some people which is why I mentioned the risk as some people do not seem to have understood what they are tracking.

payless

Products that track SVR are usually called discounts . Trackers either track the BoE base rate , or the lenders own Bank Base Rate ( not Mortgage SVR.. they are different)

I think it is safe to say if a UK clearing bank ( say Barclays or Lloyds) for some reason say Our Bank Base Rate , its safe ( as much as anything is these days... read the really small print for variety of potential get outs) that
the rate is the same as BoE tracker

You did say

I think it's fair to say that rise in BBBR would follow a BOE raise but the converse is not necessarily tue.