Fixed, Variable or Tracker - if you're buying today.

Soldato
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So a friend has asked for my opinion on whether she should go for a Fixed, Variable or Tracker mortgage. Friends tend to come to me for this sort of stuff because I'm fair at maths and logic. Like most people who aren't, they confuse these things with being informed. And if I knew how to reliably and precisely forecast interest rates, I'd be off for my prize in economics right now.

So, a strawpoll of GD's resident experts along with any as to what they think is best right now. I would prefer not to give advise (knowing my limitations) but this particular friend could really use it so I'm suspending my say nothing policy. Currently, I've given my opinion that if they can't afford the payments to go up, get a Fixed. I told them that Tracker is for people who can afford the risk of it going up. I personally can't see a house boom in the next five years so expect interest rates to stay low to prop up the market. So I would opt for Tracker myself ideally, if I could make the payments fairly comfortably.

Thoughts?
 
Thanks both. I know the question is a bit of a fool's quest and I know they shouldn't be seeking advice from anyone other than an independent professional. However, with this specific individual, I feel more comfortable telling them something rather than leave them making wild assumptions. I know that my assumptions will at least be "well, probably this" rather than some dramatic confidence.

Why do you both anticipate a marked rise in interest rates? Sensible caution aside, you both sound like you think the good times are over. With Brexit, Corbyn and the general state of things, I don't see the confidence necessary for a housing boom any time soon. Am I wrong?
 
I went for a tracker a while ago as the rate was low and frankly it meant I didn't need to re-mortgage again after 2 or 3 years.

I went for a Five Year Fixed four years ago. Was a mistake in retrospect but I was overly-cautious and worried about it rising. Would have saved a nice little sum had I gone Tracker. But I accept I got the certainty and there would be a price for that. Didn't anticipate interest rates staying so low. The offers available out there right now seem really low to me compared to what I'm on. :/
 
Tend to agree, it'll go up, but not loads, maybe to 3% over a sustained period of alleged growth. Main issue with mortgages now, is the banks have build slightly larger and lager cushions between them and the base rate into such products. So a 3% base rate, will be heavy enough mortgage rate. At a rate of 7%, interest doubles your mortgage in 10 years, In 25 years its nearly 5 times the amount, such are the issues with compounding. Now, obviously in a capital payoff this isn't as big an issue as the overall loan amount is dropping. So it isn't quite the effect.

Massive impact on Interest Only mortgages though, I presume. Are there still lots of BTL landlords with Interest Only mortgages relying on house value increase for the final pay off? Or were there ever? I seem to recall that being quite popular not long ago.
 
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