Tracker mortgages/interest rates

[lostindreams]

Hello everyone, the time has come to remortgage and I'm debating whether to switch to a no fee tracker mortgage. I'd like to sell the flat I'm in but the only problem is I was recently made redundant so I'm not in a position to do so just yet. Is a good idea to get a tracker in the current climate? I know no one can predict the future but is the general feeling that interest rates will go up or down?

I also have the option of a 1 year fixed which would give me enough time to sort myself with a new job and not worry about my mortgage fluctuating. Both tracker and the fixed would be the same monthly cost.

I'd be a bit worried about remortgaging without a job
Has your mortgage just come to the end of a fixed rate?
What does it revert to?

It's fine to remortgage without a job as I'm staying with the same provider so they won't need to do any financial checks. Yes, it's coming to the end of a fixed rate. It'll revert back to the SVR which is a lot higher.

Anyone? :)

Well rates won’t be going down. They can only go up. But how long that will take is anyone’s guess.

When we remortgaged with the same provider they did all the checks again as if we were taking out the mortgage for the first time.

I don't think rates can go any lower tbh.
I would personally get the 1 year fix.
Finding a job, get enough payslips, finding new property and selling can well take the year.

I’d fix now, rates are historically low. Are you sure you don’t have to do the checks?

Some providers don't. Mine didn't. Took me 3 clicks to get new fix.
I think Martin Lewis is campaigning for a change in a system so when people try to remortgage, only their repayment history would be taken into an account and they wouldn't have to go through all that process like with the first mortgage again. Even when chnaging providers AFAIK

@NinjaInFluffyPJs Oh that's good to hear! Remortgaging was much mote stressful than originally getting the mortgage despite our salaries being higher and the property worth more, for some reason known only to the bank.

Found it

www.google.com/amp/s/www.moneysavingexpert.com/news/2019/01/new-rules-to-help-140-000-mortgage-prisoners-could-be-introduced/amp/

I've just fixed for 5 years. The only way interest rates can go is up, and I'm old enough that my first mortgage, with first time buyer discount, was 11.5%. Fix!

I believe OP is actually doing a mortgage 'switch' with the current provider which for most lenders wont do any of the searches or checks. They just switch you to a different product. As long as OP keeps the term and amount borrowed the same.

But if you want to change the term or increase/decrease the amount then it becomes a remortgage and that would trigger searches and check of affordability, etc..

OP in response to to your question, it would depend on how you approach risk. I think that yes interest rates are only going to up but at a much slower rate. Whilst for affordability they would stress check one to see if they could afford repayments at a higher rate (my last remortgage they checked at 8%), I don't imagine rates going up anywhere close to that so if there is wriggle room in your budget to meet a few rises (0.25 to 1% at a time) then I would consider a tracker.

However, heed MSE's Martin musings on the subject a few months ago where he mentioned that actually rates are so low at the moment that fixes and trackers are not too dissimilar. Obviously you would need to check to confirm whether this statement is still true. Even the most recent weekly email from MSE mentions 2yr fixed mortgages down to 1.35% (albeit with a high fee).

Oh and if your flat gained value, some at least my provider, can send out a valuator for a fee. It saved me 70 a month because we did works on the house😮
Oh yes @Notyetthere. A mortgage switch.

I speak as a mortgage broker so perhaps I can inject some knowlesge into this discussion instead.

Firstly if its a product switch ( where your lender offers you a new "product" once your current "deal" ends) then there are none of the usual income or affordability checks. The regulator said a year or two back that as the customer was already with that particular lender & that they would not normally check during the life of the mortgage if you are in the same job or if your situation had changed then they cant it just because you are changing rates

Secondly. Interest rates could well fall. The US only yesterday hinted that rates over there could fall & if we Brexit without a deal then the BOE might have to cut rates to stimulate the economy. The latest thoughts from the City is that rates are likely to stay where they are into 2020 & there may not be a rise (and then just 0 25%) until 2021. But the City have been wrong before......but the trend over the past 3-5 years is that rates are increasing slower & the time between rises are longer than anyone thought would be the case since the GE in 2015.

On the OP's case I would have said that flexibility & the option to redeem the current mortgage with incurring penalties is key & the main driver in any decision making. Generally trackers have no redemption penalties (true of Nationwide, First Direct, HSBC, Barclays & Santander) but virtually all fixed rate deals will have them. So in the OP's case it might be better to go with a tracker if she feels that she will be selling the property during that period. Also, a 1 year fix is virtually unheard of, so please OP check that carefully before proceeding if that is your decision.

I hope that helps.

I second hadthesnip. I'm a financial adviser and deal with mortgages as well and this is exactly as I'd advise.