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Is now a good time to fix mortgage rate or should I stick with a tracker?

(7 Posts)
Grockle Sun 17-Jul-11 20:41:11

I have a fairly well paid job at the moment but am going part time as of September so will lose 20% of my income. I have a tracker mortgage - an offset one - but I am wondering if I should fix the rate now. Is this a sensible thing to do or should I just stick with what I have?

Grockle Mon 18-Jul-11 06:47:01

Any ideas? Am seeing a mortgage advisor but they always have their own agenda

DaisySteiner Mon 18-Jul-11 07:09:32

Well I have a tracker and no plans to change to fixed rate any time soon. I think current suggestions are that it will probably be next year before BoE raise the base rate. When you factor in the very high mortgage fees, the base rate needs to go up a lot before the fixed rates look tempting.

CogitoErgoSometimes Mon 18-Jul-11 10:17:26

The answer depends upon your attitude to risk an how well you could cope with a rise in mortgage payments. Average base rates over the last 10 years have been about 5.5%, for example, and it would be reasonable to assume that they would eventually get back to those levels in the next two or three years. What would that do to the payments with your tracker and could you afford them? If not, then a fixed rate could provide peace of mind.

Alternatively, you may decide to take a calculated risk that the rate rises won't happen very quickly. While the tracker is low, either make plans to make extra payments off the capital or beef up your savings accounts. That way, if/when rates go up, you are more cushioned against its effects.

Grockle Mon 18-Jul-11 18:48:58

Thank you. I am tempted to leave it on a tracker but I'm worried that if I DO decide to fix it later, the fact that my income is 20% less than before will be a problem to other lenders.

CogitoErgoSometimes Tue 19-Jul-11 07:03:33

If your income is lower and you can see yourself wanting to fix in the future that's another good argument for paying down some of the capital while you have the chance. If the value of your property increases, the outstanding debt reduces & the % you wish to borrow decreases lenders will accept a lower income.

Putthatbookdown Mon 25-Jul-11 19:51:17

Sensible advice from previous posts re overpaying on tracker while it is low interest

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