Mortgage- fix or tracker?

[JugglingJanuary]

Hi all

I can't find any current threads on this.

Mortgage deal is coming to an end & I need to decide what to do next.

Fixed deal 2/3/5 or base rate tracker only 2yr available with my lender. Lender seems about the same rates as other 'brands' & I don't really want to switch lenders.

I've always fixed as I like to know where I'm at, but I have read a few things saying that tracker is better. Some posters say they been on a tracker for years & always been better off than if they'd fixed.

If I fix should I
2 @ 1.49
3 @ 1.64
5 @ 1.64

Tracker 2yrs is currently @ 1.34 (base rate plus 1.09)

No fee.

I know it's all a bit 'how long is a piece of string' but just interested in opinions.

Oh & although I'd need this job to move, (to get a decent mortgage) I'm risk averse, so wouldn't push my own 'affordability' level, but I'd be in a new job or freelance, so not so good for getting a mortgage.

I don't think interest rates are going to increase significantly in the short to medium term.

Yes, we need to control inflation, but there's a lot of debt out there that will get very expensive with detriment to the economy if they rise by more than a small amount.

If you're likely to sell up in the next 2/3 years, a 5 year fix could leave you open to expensive ERPs.

Therefore, I'd be tempted to go for the tracker and take the hit if rates do rise.

If you fixed for 10 years, would that tie you in for that long with ERPs? If so, and you're likely to sell up and not port a mortgage in that time, that could turn out very expensive/restrictive if you want/need to move.

If you are likely to be moving sooner rather than later (eg in 2yrs vs 5yrs) go for fixed for 2 years and then see what happens next. Overpay like mad during these 2 years, as well.

I feel like I mustn't have explained myself very well.

I might move locally, whereupon I could port it, so not worried about that.

If I go to my Mum, I'll rent the house out, initially at least. (I can do this with Nationwide) maybe/maybe not sell.

@BarbaraofSeville. Yes. 10yr is

y1 -Y4 5.5%
Y5 5%
Y6 4.5%
Y7 3.75%
Y8 3%
Y9 2%
Y10 1%

@TellMeItsPossible that's what I was going to do initially, but have read so much that says that's the worst thing to do because rates are likely to be much higher then & loads of people remortgaging, having done the same.

I'm so confused now.... 🤦🏻‍♀️

Right well, the other option is to play it safe, and figure out what the early exit fees are likely to be, sock it away and take that cost on the chin when you decide to move. It might involve a lot of maths to figure out the lest painful option!

Fwiw I am on a 2 year fixed simply because I had to buy out the ex and barely scraped by on their affordability calculators. It's at 1.89% and that'll just have to do for me. Fingers crossed I get a good deal in 2 years!

@TellMeItsPossible

I bought here in 2009 & got fecked over by Abbey going under & RBS Offering a 6% mortgage. It was all at the 11th hour, the MB did well to secure a mortgage I guess, but it was much higher rate than my offer with Abby (think it was 2.25%) fixed for lots of 2-3 years since then

The back of my envelope (big note pad) is full of calculations.

It's all the unknown of my life that are making it difficult. Job/Mum/wanting to move locally/other shite...

🤦🏻‍♀️

Frustrating indeed!

@TellMeItsPossible. I'm glad you managed to secure it!! Hopefully it's reasonable in 2 years when you need to remortgage!!

Are you doing ok?

It's not just the interest rates you have to consider either - I would also check what your possible mortgages allow you in terms of overpayments. The more the better - you never know what's round the corner so flexibility in being able to pay a chunk of your mortgage off is ideal.

@CrappyXmasMarket

It's not just the interest rates you have to consider either - I would also check what your possible mortgages allow you in terms of overpayments. The more the better - you never know what's round the corner so flexibility in being able to pay a chunk of your mortgage off is ideal.

@CrappyXmasMarket

Yeah, I've got that bit 'in hand' thanks 😊

My bigger issue is letting it out if I go to NZ (where mum is). Nationwide will let me do a 'consent to lend' @1% higher than whatever deal I'm on. I can stay on the consent to lend indefinitely, but as soon as the fixed deal ends, I drop onto SVR & cannot fix another deal. I won't be able to change to BTL while I'm in NZ as I have to be currently resident in the U.K. at that time. I'd have to come back to the UK, evict my tenant, reside in the property & then fix a new rate & start the entire process of consent to lend over again.

🙇🏻‍♀️🙇🏻‍♀️

I fixed for 5 years 2 years go. I'm abit twitchy about it as I'd like to reduce the mortgage by selling an outbuilding I got planning permission on but erp.

@womaninatightspot

Have you looked at how much the ERC would be, compared to how much interest you'd save?