We're at the end of our deal and I can't decide whether to fix or track, and for how long.
Certainty of payments isn't an issue as we're not stretched. Good rate value is the focus. I don't want to be tied in for too long as our house value is increasing so want to make the most of the decreasing LTV to access better rates. BUT I don't want to keep paying £1k every 2 years to remortgage
They've been saying rates will go up since we took out the last deal 2 years ago and they went down. So not sure what to make of that now.
We fixed for 5 years. Longer than we'd previously done but have no plans to move and figure that even if interest rates do drop there isn't that much further to go as they're so low at the moment but if they go up even a couple of % it will make a massive difference. Kept payments the same as on a previous higher interest rate and plan on overpaying whilst rates are so low to make the most of good rates.
Looking at a 3 year fix with our current provider, under 2% APR, don't want a longer fix as am likely to repay the whole thing at the end of the 3 years. I think at the moment given everything that is going on I'd want to fix rather than track.
What's your Standard Variable Rate? Some are quite low so you may be as well staying on that for now. You've identified the way that the banks have tricked people into paying remortgage fees every 2 years is by thinking that this is the norm.
Are there any low/no fee deals available? I think you can also find calculators on the web that work out if it is worth paying a fee or not - look on moneysavingexpert. If you have a big mortgage it can be worth paying a fee to get a lower rate, if you don't, at some point the fee will wipe out what you save.
Are there any lifetime tracker deals these days? We paid a small fee to get a low rate lifetime tracker some tears ago and it has really paid off as our mortgage rate is currently about 0.6% pa so will probably never switch again, but before that, every time I looked into it, fixing has always looked a poor deal.
People go on about 15% mortgage rates in 1990 but the reality is that I don't think rates will rise significantly in the short/medium term because it would utterly fuck the economy due to the amount of personal and business debt out there.
I think that a lot depends on the amount of mortgage and how much the 1k cost of fixing every 2years eats into it, I.e. If you have 50k outstanding then it's a whopping 2% and you'd spend less paying higher interest with no fees. But at 500k outstanding, it's only 0.2% so you'd benefit from having super low interest on a 2y fix. Another thing to consider is that 2y fix have the lowest interest rates so you pay down a lot of the capital. If you fix for longer, you'll be spending double on interest and not pay the capital down very much. So if my outstanding mortgage was under about 200-300k (depending on LTV) Id go with a longer term and no fees. If it was more, I'd go with a 2y fix. I'd also put some money into relatively accessible savings/investments in case the market is a bit dodgy in 2years time. However, it'd be best to do exact calcs for your own situation.
We went to a tracker in September. Worked out for us as it was a significant drop in interest and then a double whammy when the base rate dropped. Base rate would have to go up by 2% before we are paying what we were paying before. On that basis we decided to take the savings for two years. We can move to a fixed with the same provider at any time without penalty. We think we'll do a long term fixed next time but that won't be until 2018.
Outstanding mortgage is £250k, LTV 70%. Getting a lower rate and paying down the capital sounds good and then the LTV % will be even lower in 2 years time'.
The 2 year fixed rate is 1.39% or 5 year fixed is 2.09% (no fees on either). My concern is that in 2 years' time, even with lower LTV % we'll be looking at higher than a best rate of 2.09% when we remortgage. And we will wish we'd paid +0.6% for 2 years, for the benefit of the following 3 years potentially being at a really good rate.
But I'm not overly comfortable with being tied into a product for 5 years.
I would have got a lifetime tracker deal if I could. However after selling last house which was on a lifetime tracker the account had to be closed and I couldn't find anything close to it again. So fixed for 2 years in the hope that we can remortgage and find a suitable tracker next time. Our LTV is 88% but is a major renovation project and in 2 years expecting closer to 60-70% LTV which will unlock a lot of the better deals
We're on a lifetime tracker at the moment (currently 2.04%) but are in the process of moving to a 10 year fixed at 2.64%, no arrangement fee. Why are people so confident about lifetime trackers? Am feeling a bit nervous about committing to 10 years so am genuinely interested.
@BonnesVacances Here's some loose calculations: 2 year fixed at 1.39% and then another three years at 2.39% (assuming a 1% rate increase) leaves your balance at £208042. If you could get three years on 2.09% your balance would be £197147. 5 year fixed at 2.09% leaves your balance at £199134. These are based on no fees and obviously the calculations aren't accurate but it gives you an indication. The other thing to consider is if the value of your house goes up in two years and you can get to 60% LTV then you will get a better rate. You will get to 60% quicker on a lower rate as you will pay more capital.