Tracker, or just too risky?

[pamshortsbrokenbothherlegs]

I think I know what the consensus will be, but hear me out…

My fixed rate ends at the end of this year, and we’re looking at options to remortgage. Unfortunately this wasn’t possible before now as I’ve only recently started a new job after a maternity leave, but here we are.

Broker has sent through two options, a 2-year fix and a tracker, at my request.

The reason we’re not pushing for a longer fix is that we hope to sell and buy a house next year - obviously I can’t see into the future and have no idea how long this might take, but we’re in a two bed flat with a very active toddler and would like to have another baby sooner rather than later, so it’s a priority for us. We're planning to put our flat on the market around Easter time.

The fixed option has ERC’s which would mean an extra £5k+ if we wanted to get out sometime next year. The monthly payments are also about £300 more than our current fix (not ideal but affordable).

The tracker option has no ERC’s, and the payment currently sits at £150 more than our current one, although obviously there is no saying how high it might go, next year or even by the time we start paying it in January. I know that interest rate rises could absolutely eat away the monthly savings and into that £5k “saving” of the ERC.

An obvious answer would be the fixed if it were portable, but I don’t think this is an option - technically this is my mortgage as I bought this flat before my husband moved in (though we pay it together now), and the new house would be a joint purchase.

Am I crazy to even consider a tracker right now? Advice and crystal balls appreciated.

I’ve been on a tracker for years because we were always “thinking about moving next year”.

I could kick myself now for all that time we’ve been paying over the odds when we could have had a 1% fix.

On the plus side, we are already used to paying high rates (I think it’s 4.8% at the moment).

I have a small mortgage product from a remortgage for renovations
Total o/s 27500£
I currently pay £130 pm

My main mortgage has gone up by over £130 pm in total so far

So this smaller product I can either fix for 2 years £60 more
Fix for 3 years £60 more
Fix for 5 years £50 more
All are between 5-6%

Or 2 year tracker which right now would be £20 more

I am also considering the tracker for 3 years....

Depends what you can handle - bank interest rates were close to 6% as standard when I bought before the 2008 crash so very believable they could end up there again.

I'm on a tracker from then at just 0.87 above base rate but I'm still fixing now at 4% as although I'll be paying more, it will only take 2 more rises to get there.

Can you not look at a shorter fix say 2 years (in the hope that rates come down but to shild from any further current rises), that is also portable if you did look to move, we fixed as rates started to rise (but when the rise was expected to be slower/ not as high) to 5 years but it is portable so we can take that rate/ mortgage with us if we move

OP the deal I've been offered by my broker sounds almost exactly the same. I've got 7 years to go on a £70k mortgage and if I fix for 2 years, payments go up by £167 - and there are ERC if I settle sooner. The tracker option means my payments go up by £80 a month (on top of current payments, not on top of the £167!), and there are no ERC. I'm thinking at the moment to go for the tracker, and see how things go over the next couple of months (my current deal ends end December).

I actually have a personal pension I could pay off my mortgage with, but my plan was always to overpay monthly and keep the money building up in my pension (not that it is currently!).

It's a headfuck!