Tracker Mortgages
- Thread starter panthro
- Start date
Interest rates may go up as well as down! Oh wait...
Ultimately they can only up in the long term, but as to when they will start going up is anyone's guess. My guess, is that it's still years away because of the mess the economy is in.
Ultimately they can only up in the long term, but as to when they will start going up is anyone's guess. My guess, is that it's still years away because of the mess the economy is in.
Im not much of a risk taker and I have been offered some figures: a 2 year fixed rate at 2,99%, 3 years at 3.19% or 5 years fixed at 3.69%. I am yet to explore tracker options but wondering if its worthwhile as these offers are very competitive.
Soldato
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- 31 May 2009
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It depends on the rate, most trackers are starting a full 2% above where they did in the boom.
Base +0.39% would become base +2.39%, which suddenly makes those fixed deals look reasonable. Interest rates go up 1% in 5 years and your five year fixed looks like a winner.
Rates probably won't move much for 18 months, and many trackers allow you to get out anytime you wish (well they certainly use to) so it might be favourable, assuming you can shift later without arrangement fee or penalty.
Base +0.39% would become base +2.39%, which suddenly makes those fixed deals look reasonable. Interest rates go up 1% in 5 years and your five year fixed looks like a winner.
Rates probably won't move much for 18 months, and many trackers allow you to get out anytime you wish (well they certainly use to) so it might be favourable, assuming you can shift later without arrangement fee or penalty.
That 5yr fixed is a good deal, what sort of LTV is that with?
Soldato
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- 23 Dec 2009
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I currently work for a mortgage provider and we are in the belief they will stay low for another 18 months.
Rather that get a tracker and be tied in, why not just go for a satandard variable?
Rather that get a tracker and be tied in, why not just go for a satandard variable?
Its 75% LTV with Yorkshire Building Society. Im unsure of the fees; it was a product offered through a financial advisor that my family have used for a long time.
Be careful with the fees as average arrangements fees have absolutely skyrocketed in recent years; I've seen a lot of these 'best buy' tables having mortgages at the top with fees in the £995-1995 range.
What you need to do is sit down and work out the impact of the arrangement fee over the 5 year term; as a rule of thumb the less money you are borrowing, the smaller you want the arrangement fee to be. Or in other words, if you only have a modest mortgage then in some cases it may be more cost effective to go with a higher rate but reduced arrangement fee.
As for the fixed vs tracker issue, a few years ago trackers were great value (I took a lifetime +0.59% tracker with no fees when rates were 5.5%) but that has diminished in recent times. If you can fix for 5 years or more at a decent rate (such as 3.69% you quoted) with low fees then that would probably be my preferred option. Shorter fixes don't hold much value IMO as it seems unlikely that intrest rates will increase sufficiently in the next couple of years to make them better value than trackers.
What you need to do is sit down and work out the impact of the arrangement fee over the 5 year term; as a rule of thumb the less money you are borrowing, the smaller you want the arrangement fee to be. Or in other words, if you only have a modest mortgage then in some cases it may be more cost effective to go with a higher rate but reduced arrangement fee.
As for the fixed vs tracker issue, a few years ago trackers were great value (I took a lifetime +0.59% tracker with no fees when rates were 5.5%) but that has diminished in recent times. If you can fix for 5 years or more at a decent rate (such as 3.69% you quoted) with low fees then that would probably be my preferred option. Shorter fixes don't hold much value IMO as it seems unlikely that intrest rates will increase sufficiently in the next couple of years to make them better value than trackers.
Best to get all the details then, over a 2 year fixed the fees can be a significant amount.
