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Original poster

Mortgage: fixed or tracker

12 replies

musicmusic · 08/08/2012 13:28

HI. I am on a fixed rate and it comes to an end end of Sept. shall I opt for fixed 2 (3.89%),3 (4.09%),5 years (4.39%) or tracker 2 years 3.69 (BoE+3.19)? we are on a interest only mortgage, have 2 small kids. We are both working

OP posts:

Lizcat · 08/08/2012 14:35

This all comes down to where you feel the market is going there is no one right decision on this.

OneLittleToddlingTerror · 09/08/2012 09:01

It's hard to see the future isn't it? I went for a tracker myself a couple of months ago, but it was a lifetime tracker at 2.99%. It means it has no exit fee and I could change to a fixed if interest rates starts to rise.

Spinaroo · 09/08/2012 09:08

Am thinking of this myself at the moment. the only thing I would advise against, and will never do again, is the 5 year tracker. we are just coming to the end of one as well, where we have been paying a rate of over 6% whilst watching rates plummet. I have looked at getting out of it several times over that period but the penalties would have equated to the thousands of pounds we have lost in interest at that rate. I think the maximum I would do would be the 2 yeR fixed but I, too, am looking at the lifetime tracker with no exit fee, although it does have a hefty arrangement fee I think. Onelittletoddlingterror, can I ask where you are getting that rate?

OneLittleToddlingTerror · 09/08/2012 09:11

Spinaroo I came out of a 5 year fixed too and paying 6% like you. I thought I would pay more for some security. I'd never ever ever do it again. My tracker is with first direct.

OneLittleToddlingTerror · 09/08/2012 09:12

The arrangment fee is £499 btw.

Spinaroo · 09/08/2012 14:44

Thanks, off to look at that

Fizzylemonade · 11/08/2012 07:49

The way I look at it is do you just want to beat the market or know exactly how much you will pay every month?

We have always done fixed rates and beat the market every time except with the last 2 year fixed. But that is not the important thing to us, we just want to know that for the next how ever many years the mortgage is X per month.

We have just done a 5 year fixed rate as we have a 5 year house improvement plan which includes over paying the mortgage after 3 years.

Tesco have just launched their own mortgages and it would seem the banks are dropping some of their rates to compete.

dillnameddog · 14/08/2012 19:45

My financial adviser told me not to bother trying to second-guess the market because it was impossible. His advice was to just do whatever was cheapest at the time because at least then you would benefit in the short-term.

On that basis I would go for the tracker (there is talk of a further drop in interest rates) or the two-year fixed rate.

Starboo · 15/08/2012 23:45

I've heard that interest rates are unlikely to go up in the next year, perhaps even 2 years so a tracker where you can switch to fixed rate if necessary might be worth looking into. But it's so hard to decide. If only we had a crystal ball...

vj32 · 16/08/2012 13:20

What rate will you revert to (mortgage company base rate)? You might be best not doing anything. We have been not doing anything for the last couple of years. Much cheaper!

You can look online and read the minutes of the committee that decides the interest rates - DH kept checking how they were voting for a while, and decided they were unlikely to go up soon. Not sure how they are voting now though. Kind of reassuring to be gambling based on evidence rather than just gambling. Even if it really doesn't make any difference at all as they could all change their minds next month!

oreocrumbs · 17/08/2012 08:25

I have just come out of a fixed and am going onto my banks standard rate.

I couldn't see which was the best option and with my banks arrangement fees and penalties I thought this was the best bet for me. I'll stay on this untill we do know that rates are going to start rising and such then I will go back onto a fixed rate. I have a couple of hundred pounds wiggle room a month in order to be able to do that, and then I will have to fix.

There are no right or wrong answers as to what to do. Everything is so up in the air, if the 'experts' don't know whats going on how on earth are we meant to!

Just remember that if you don't have wriggle room in your budget for your mortgage to go up much, then you are better on a fixed rate because you know what you are paying.

Notmadeofrib · 17/08/2012 08:34

the only thing I would advise against, and will never do again, is the 5 year tracker. we are just coming to the end of one as well, where we have been paying a rate of over 6% whilst watching rates plummet.

Well hindsight is always the best investment and poor advice!

If you have no room for an upswing in rates (ie budget is tight), your income can vary or you just like to know your costs. Don't gamble with your mortgage and fix. You will however pay for the privilege and it costs you in percentage points on your rate. If the opposite is true then don't fix.

Banks have teams of economists predicting rate moves and make offers so they can be competitive and make a profit. If they can't get it right then you?re just damned lucky if you can guess it.

Choices should be appropriate to the individual and THEIR individual circumstances.
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