Would it be madness to take a tracker mortgage out now?

[capturingdaydreams]

My fixed mortgage is coming to an end this month. I'd like to see if I can sell my flat so I was thinking about switching to a tracker (so no fees if I leave early) and if I can't then just get another 2 year fixed.

Obviously a tracker mortgage is linked to the Bank of England base rate and no one knows when that'll go up/down but is there a time when it's more likely to happen? Say at the end of the year? How many times does it usually change in a year?

Anyone on a tracker mortgage now? Would it be silly to get one considering how turbulent the economy is right now even if it's just for a few months?

Bump

Well how much would you need to pay in early redemption penalties and are you actively trying to sell or is it a vague plan once x, y and z is done? We have been in vague plan stage for a few years now!

My fixed rate ended 2yrs ago and I've been on the standard interest rate ever since.

My mortgage company reviews the rates quarterly but has only ever changed it annually, my monthly payments went up by £5 and £7 on a £65k balance (7yrs remaining).

I would if you're selling, just because any rise in that time is unlikely to be more than exit fees on a fixed rate.

Thanks for the bump, Reese. The penalty would be around £5k I think. It's more put in on the market and see what I could get for it. If it's not enough to cover my fees etc, I'd probably have to reconsider.

I guess I can just switch to a fixed a few months down the line. I can do that right?

We’ve been on a lifetime tracker since 2009 and obviously it has been fantastic for us. I don’t think rates are going anywhere in the next couple of years so I probably would take one out. Longer than that, probably not.

I guess I can just switch to a fixed a few months down the line. I can do that right?*

Exactly - exactly the point as no exit fees. Particularly with Brexit looming in the next year I doubt interest rates are going anywhere, and if so still less than exit fees on a fixed rate.

I think no one can really predict what will happen with brexit. With interest rates so low, I’d probably fix it because a further drop in rates isn’t going to cause a huge increase in most mortgages as there’s not much more they can fall before they hit zero iykwim.

The key in this time of economic instability is to pay it off ASAP and have savings to weather the upcoming storm.

Fox - did you read the full post? OP is going to sell soon and needs no exit fees

Thanks for all the advice. I'll go for the tracker and switch in a few months if I can't sell.

Just a note regarding fix rates - any anticipated increases in the BOE base rate have already been factored into the fixed rate - the bank offering will be fixing its funding now which incorporates current market expectations. Effectively fixing protects you only against unexpected rate rises.

If you are thinking of selling I’d suggest going on to the banks SVR until you know what your plans are.

Any move to a tracker product will likely incur arrangement/product fees which may well add up to more that the interest difference between the SVR rate and the tracker rate. Obviously, need to caveat at as I don’t know what your outstanding mortgage is, what the SVR is, arrangement fees and what the tracker rate is.

Tigerpig - Luckily there are no fees involved!