Standard, fixed, discount or tracker?

[Samtheman1k]

I realise the difference between the types of mortages available, but what I don't know is which type I should get?

From what I understand, standard is the bank/building society's standard rate, normally pretty high and is not really a contender.

Fixed is good, as the rate is fixed for a set period, but you generally pay a higher rate than, for example, a tracker.

A tracker is good at, e.g. 0.5% above BOEBR, but is highly dependent on interest rate rises/drops.

A discount is cheap at first, but also depends on the BOEBR, but not as dynamically as a tracker and is generally higher after the discount period ends. I can change after the discount period and after the redemption fee period, but would have to pay arrangement fees on the new mortgage.

So, it all comes down to what I think will happen to the BOEBR in the future, which, of course, I DON'T KNOW!

What type of mortgage has everyone got?

EDIT: I guess there are 5 cases of what interest rates will do and the type of mortgage that will benefit is:

Major rise: Fixed
Minor rise: Fixed, discount
Static: Fixed, Tracker, discount
Minor drop: Tracker, discount
Major drop: Tracker, discount

 

[rpstewart]

The type of mortgage is very much dependent on your own personal circumstances but you've got the basic ideas right. There is no point in a standard rate mortgage, the lenders are fighting for business so there are plenty of deals about.

I suppose the first question is can you continue to afford the repayments if the interest rate changes in the next year or two? If your budget is tight then fixed rate, even for a couple of years, is a good plan. You get the security of a known payment but the tie in isn't too long so if rates go down you don't lose out greatly.

Personally I'm on a discounted mortgage at the moment but looking to move on to somewhere with a much bigger mortgage in the next year or so. At that point I'll be going for a 2 or so year fixed rate deal to give me a bit of stability and then see how things go with rates, salary etc thereafter.