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PutneyJoe

Fixed Or Tracker?

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Hi, Newbie here, apologies if this is the wrong kind of question for the forum...

My nice 4.9% fixed mortgage expires in April and I need to get a new one. Halifax are offering me a fixed or a tracker. The fixed is a better deal assuming rates go up or stay where they are, the tracker would be better if they go down, as I understand it the tracker is 1.5% above BoE so if BoE goes down it goes down. I can do either between 2 or 5 years.

I was thinking of the fixed (6.64% no fee, 6.24 with £499 fee 6.09% with £999 fee) for 2 years but now I'm wondering if the tracker (6.74 -> 6.30%) is the better option...I just wondered if there was a consensus of opinion...

Any views much appreciated.

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there are much better deals out there at the moment. grab one of them while they are still available, unless you are a sub-prime borrower in which case you are probably screwed.

Personally I would go with a tracker as I think that the BOE will be forced to cut rates as the economy tanks and inflation targeting goes out the window.

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Hi, Newbie here, apologies if this is the wrong kind of question for the forum...

My nice 4.9% fixed mortgage expires in April and I need to get a new one. Halifax are offering me a fixed or a tracker. The fixed is a better deal assuming rates go up or stay where they are, the tracker would be better if they go down, as I understand it the tracker is 1.5% above BoE so if BoE goes down it goes down. I can do either between 2 or 5 years.

I was thinking of the fixed (6.64% no fee, 6.24 with £499 fee 6.09% with £999 fee) for 2 years but now I'm wondering if the tracker (6.74 -> 6.30%) is the better option...I just wondered if there was a consensus of opinion...

Any views much appreciated.

Again, much better deals out there. This sounds expensive.

Fee or no fee basically depends on the size of your mortgage.

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people will say tracker prob but I would go for a 5 year fixed rate - 5.63% similar available. if you fix your homes' cost for 5 years at an affordable level, why gamble? inflation will reduce it in real terms. even if looks like rates going down this is not the sort of market I want to gamble on.

any sites with table will point you in the right way or as an IFA I can get you rates not always available direct if want help.

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there are much better deals out there at the moment. grab one of them while they are still available, unless you are a sub-prime borrower in which case you are probably screwed.

Personally I would go with a tracker as I think that the BOE will be forced to cut rates as the economy tanks and inflation targeting goes out the window.

the only issue with a tracker and even if it linked to the BOE, is that they dont have to pass on any rate cut. Standard and Life didn't pass on the last rate cut to us. The cited a clause within the agreement about changing the offset amount to suit market conditions. Essentially we got no benefit - which kinda sucks...

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I'd go with a tracker - and one that tracks BoE base rate NOT Libor and is contractually guaranteed to follow the base rate.

Rate quoted seems a little high - shop around on comparison websites (motleyfool.co.uk) is good as are others.

Do you have much equity?

My personal view is to always go for a tracker. I think the markets know more about the future direction of interest rates than I do, the banks will always want to make money, therefore the fixed deals will, on average, be worse than a tracker. Clearly you should only get a tracker if you can afford / take-on-the-chin a sharp rise in interest rates to 10%. If you are already on the breadline then some sort of assurance around monthly payments is worth paying a small premium for.

Good luck!

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We don't really know what you're situation is. This is what I did when why girlfriend (now wife) was looking to re-mortgage. We went to the market and got the best rates for fixed, flexible and tracker mortgages. We then looked at what her plans were, which was to keep it for a year and then try and sell it, aiming to sell it at some time in the following year.

What we didn't know was

a : when it would sell

b : if it would sell

c : what the base rate would do

so I set up a spread sheet and allocated probabilities to each of the above unknowns. Changes in the base rate were based on the changes the BoE had made up to that point. The other two were estimates. I then ran this spread sheet several thousand times using a VBA macro to find out which of the mortgages would give us the lowest cost most of the time, including entry and exit fees. In our case it was the flexible mortgage, which had the highest interest rate but no entry or exit fees. We then checked it was affordable in a worst case situation, which it was.

I went through all this as I was trying to learn VBA at the time and used it as an exersise, but goes to show that the least obvious may be the best option.

The other point to make is that only you know your plans, dreams and aspirations, so only you will know what you are planning to do with the house in the future to allow you dreams to come true. It might be worth while accepting a higher cost now so that you have more flexibility, or you might be looking for the lowest monthly costs so you have the cash flow to do something you always wanted to do.

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Those deals sound expensive.

We have had to remortgage to relocate and Britannia BS have given us lifetime tracker at BoE+0.65 with a £399 fee and free valuation. They have got a lifetime tracker at BoE+0.5 for a £499 fee but add on £200 for the valuation. Neither of these have a free solicitor though, so you would want to factor that in. No idea of the LTV though.

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  • 292 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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