Crystal ball time!

3.74% fixed for 2 years or
3.19% tracker for 2 years

Do you think that the base rate will, as a 2nd root geometric average, be at least 0.55% higher over the next two years?

I can’t see a lot happening to interest rates over a 2 year period. If i was to fix now it’d be for 5 years +. But i’m happy with my 0.98% tracker thankyou 🙂

Are the fees and exit penaties the same for the two deals? Most people don’t believe the rates will change until 2012 now so depending on the size of the mortgage, how much difference a month does it make to you?

In all honesty, i don’t reckon you’ll see much difference in those 2 mortgages over a 2 year period.

it all goes down to what you can afford to pay now. No point in crystal ball gazing – a mortgage isn’t really the place to speculate, too many risks.

If you can afford the rate now comfortably then go with the tracker. if you are overextending yourself financially go for the fixed.

And always remember the decision you make now is the right decision at that time, don’t look back in two years and say you should have done the other as you don’t know now what you will know then.

Do you want to know what your monthly payments will be for the next 2 years or not?

If yes then go fixed.
If no then take the tracker.

Really depends how close to the top end of your budget the monthly payments on the fixed rate are. If very close then look carefully at the fixed rate but if not & you can afford rates to go say 1% above the level the fixed rate is running at then the tracker could be worth a punt.

BTW i assume you’re looking to borrow over 75% LTV as those rates look a bit on the high side compared to what I’m getting for my clients at the moment. 😉

If you want to look at all options then please feel free to email me at the address in my profile.

I’m on my last mortgage, so made sense for my circumstances to fix for 5 years. Then it’s write a cheque for the small amount left & it’s all mine 😀

Thanks – yes Si it’s 80% LTV – I think these rates are from the Nationwide – the difference in monthly payments equates to about £1300 over 2 years – not a huge amount and I think I’d prefer the certainty of fixed

I don’t understand why you are looking at 2 year deals for what is in most cases a 25 year commitment. I hope that there aren’t any fees to take this 2 year deal on. I know plenty of people that have jumped from deal to deal every 2 years, often paying for the privilege, who are worse off than they would have been staying with one long term deal.
The other thing to consider is that it is very easy to fall into negative equity when you have to keep re mortgaging. You are then forced into your current lenders standard variable rate. This is where the lender makes back all that money you have “saved” plus a big chunk more.
Get the best life time tracker deal you can find and stick with it unless you later find a better life time deal. If you must know what your outgoings are then get a fix for as long as possible.
I started out when the base rate was 11% it is now 0.5% so my payments have varied massively over the years but my flexible mortgage allows me to make under and over payments to smooth out the peaks and troughs.
I am now in the position where I am actually paying less in mortgage interest than I am getting on capital in the Building Society.
Does that make me lucky? I didn’t feel lucky when I was paying at 11%!

I don’t regard it as a crystal ball issue.
We’re hopefully moving, looking to fix for five years, so that I know what the monthly payments are; I’m aware that we will probably pay more than with other deals, but the security that we get is, for us, worth it.
My, totally uninformed, feeling is that interest rates can’t really drop any further, will probably stay where they are for a while, but could go up – hence my preference for a 5 yr fix.
Good luck!

bigsi – ygm