Tracker mortgage or discounted mortgage? What would you do?

[Sandrine1982]

Hi.

My partner has a buy-to-let property and the fixed rate is sadly coming to an end in January. I've been looking at the current rates and it's just depressing.
I think we wouldn't go for a fixed rate at the moment, so we're only looking at trackers vs discounted rates.

Could someone explain to me which one is riskier? The disocunted offers seem cheaper at the moment but I think a tracker would be safer as it follows the BoE base rate rather than the lender's own base rate, right?

Is there anything else we should be looking at? Is there anything we're missing?

Any insight would be greatly appreciated.

Thanks
x

Bump

I wouldn't risk a discounted mortgage as the lender can change their rate anytime they like... At least with tracker it will only move in line with BOE rate.

Tracker, then fix once rates come down. Long recession should equal drop in rates now inflation is priced in.

Definitely the tracker. With that it has to follow the BoE base rate, with a discount, it's (usually) pegged to the bank's SVR and completely up to them how they change it. They could leave it higher for longer compared with the base rate, as that increases their profits.

Last time we used a mortgage broker, which was over a decade ago, I asked for a lifetime BoE tracker and the broker ignored this and recommended a load of short term discounts. They were also quite rude when I explained why I wouldn't be following their recommendations.

We took the base rate tracker and still have the same product and up until a few months ago, paid an interest rate of less than 1%. Of course it's higher now, but that doesn't matter as we owe less than £10k and will pay it off over the next few months.

Brilliant, thanks a lot for your replies :)

What are the rates on offer?

For example:

2-year discounted at 3.49%, monthly payment £2,645
vs
2-year tracker at 3.75%, monthly payment £2,720.

Our current monthly payment is £2,100 so this will be quite a bump ! 😥

Oh no sorry, I've given the wrong figures (of our main mortgage ... that fix won't come to an end until next year).

The offers for the buy-to-let property are as follows:

2-year discounted at 3.79%, monthly payment £576.
vs
2-year tracker at 4.15%, monthly payment £631.

Interest only...

What's the tracker tracking - BOE + X?
And the discount is SVR - X?

Yes that's how I understand it ..

Yes :) but do you have the detail to fill in the blanks below? That will help to tell you which is better