if you were in the market right now for a mortgage deal, would you go frixed rate or tracker?

[neytiri]

ours is up for renewal, always had trackers in the past but last time, 2 yrs ago, went for fixed rate. it was a gamble but with a recession looming, we just wanted to know where we were each month. we got stung as of course interest rates went down, so we've been paying over the odds, but ho hum, i made a decision, you win some, you loose some!

am now at the same crossroads again, 4 yr fixed rate (brings the repayments down by £180 a month) or 2 yr tracker (brings the repayments down by £300 a month). it's a big mortgage, so any changes in interest rate on a tracker make fairly substantial changes to the monthly payment. just not sure i trust the climate enough to go for a tracker though.

ahhh, frixed rate!

'fixed rate'

We've just taken out a tracker. The fixed rates on offer were outrageous and expensive to arrange.

really, the fee's for the tracker i got quotes for were quite high £650, the fixed rate was cheaper £125. we're staying with the same company we're already with, only really because we have a complicated situation, ie employed earnings, self employed earnings etc. just can't decide which to go for!

The Bank of England are unlikely to lower rates further. The most they can drop is a further 0.5% anyway. They are also unlikely to put rates up much even though inflation has been higher than target. It is clear they are desperate to stop the economy slipping back into recession and will keep rates low for most/all of the next two years.

I would risk a tracker.

the reason i'm stressing about it is we need a new car. idea is to sort new mortgage, reducing monthly outgoings by £200, freeing up that £200 to pay off a 5 yr loan. going for the tracker would give us enough to pay a loan and have £100 a month extra left over, if the interest rates don't rise.

I would also speak to a mortgage broker (London and Country are very good). They may well find you a better deal and as most are free you've nothing to lose.

Yes we used a broker who found us the best deal. Tracker with Alliance and Leicester cost us nothing in fees.

What is your standard variable rate? A lot are very low at the moment and not much prospect of rising significantly at the moment.

Our tracker ends in Nov and all the deals on offer at the moment (both fixed rate and tracker) are a lot more expensive than our SVR of 2.5%. And no fees to pay.

Also spoke to a mortgage broker who advised us to stick with SVR for the moment.

Trackers are also easier to get out of if the situation changes. Fixed rate deals tend to come with early redemption penalties.

Chil, trackers also usually have early redemption penalties. They do, however, often come with the option to swap to a fixed rate at any time.

Only SVRs usually have no redemption penalties.

Again our deal ended in May and all the current deals are much higher than our SVR 1% of bank of england base rate - at the moment this looks like it could be the best mortgage around for a long while.

When we took this mortgage we went to our usual broker, but this particular deal was not avaliable through brokers, so it pays to check both.

neytiri it looks like things are really going to be tight if you are down to only £100 per month left over - have to be honest. It wouldn't take much of an interest rate rise in order for you to be struggling if you opted for a tracker. How risk-averse are you?

oh, we don't have just the £100 left over once we've paid the mortgage, it would be an additional £100 on top of what's already left over, we're skint but not quite that skint

am ok about taking the odd risk, took a big risk buying the house in the first place, big house, big mortgage, right before the housing market slump and recession! am coming round to the idea of the 2 year tracker, there would have to be 8 interest rate hikes in the next 2 years for it to get to the rate we are on now.

neytiri phew re the £100. I thought you were a bit game!