Mortgage Options - which would you choose?
Discussion
I've decided to nail down my mortgage before the Scottish referendum (it will be "no" by the way, I think!) and because I suspect an interest rate rise before the end of the year.
I have three options in front of me and all seem pretty good. At the moment I have a £185k mortgage on a property worth around £375k and have about 13 years left to go, my current deal is BR + 2%, unlimited overpayments and no ERC.
The three options I have are;
1. 4 year fixed @ 2.29%, £900 fee, ERC & up to 10% overpayment per year
2. 5 year fixed @ 2.89%, £900 fee, ERC & up to 10% overpayment per year
3. 3 year tracker @ BR + 1.29%, no ERC, no fee and unlimited overpayments
I'm seriously tempted by the tracker but have never had one before so therefore look at the 5 year fixed as the "safe" option. Any thoughts Pistonhead financiers?
I have three options in front of me and all seem pretty good. At the moment I have a £185k mortgage on a property worth around £375k and have about 13 years left to go, my current deal is BR + 2%, unlimited overpayments and no ERC.
The three options I have are;
1. 4 year fixed @ 2.29%, £900 fee, ERC & up to 10% overpayment per year
2. 5 year fixed @ 2.89%, £900 fee, ERC & up to 10% overpayment per year
3. 3 year tracker @ BR + 1.29%, no ERC, no fee and unlimited overpayments
I'm seriously tempted by the tracker but have never had one before so therefore look at the 5 year fixed as the "safe" option. Any thoughts Pistonhead financiers?
I shifted ours to a lifetime tracker recently, base rate + 1.49% (so 1.99%) with HSBC. Unlimited overpayments.
Seemed like a good idea at the time and my logic is that if the base rate does start to climb I can always switch to a fixed as the tracker has no redemption penalties.
So I'd go with the tracker.
Seemed like a good idea at the time and my logic is that if the base rate does start to climb I can always switch to a fixed as the tracker has no redemption penalties.
So I'd go with the tracker.
C0ffin D0dger said:
I shifted ours to a lifetime tracker recently, base rate + 1.49% (so 1.99%) with HSBC. Unlimited overpayments.
Seemed like a good idea at the time and my logic is that if the base rate does start to climb I can always switch to a fixed as the tracker has no redemption penalties.
So I'd go with the tracker.
I did the same when it had a £99 fee. I was previously on their base rate + 1.89% so I soon started saving money. I used the same logic as you as I can switch mortgages if circumstances change.Seemed like a good idea at the time and my logic is that if the base rate does start to climb I can always switch to a fixed as the tracker has no redemption penalties.
So I'd go with the tracker.
Option 2.
It is not worth gambling on big debt (variable rates / tracker rates).
Fix it for 5 years at the cheapest rate you can find (Nationwide may not be the cheapest)...
Overpay by 10% every year (some, like First Direct, allow unlimited overpayments)...
Save the rest of your spare cash in a high-interest savings account. Pay off a big lump sum immediately when the 5-year fix ends...
If you are earning enough, and disciplined enough, you can easily pay off that 13-year mortgage in 5 years...
Use this calculator to five-year-plan clearing your mortgage early:
http://www.moneysavingexpert.com/mortgages/mortgag...
Good luck.
It is not worth gambling on big debt (variable rates / tracker rates).
Fix it for 5 years at the cheapest rate you can find (Nationwide may not be the cheapest)...
Overpay by 10% every year (some, like First Direct, allow unlimited overpayments)...
Save the rest of your spare cash in a high-interest savings account. Pay off a big lump sum immediately when the 5-year fix ends...
If you are earning enough, and disciplined enough, you can easily pay off that 13-year mortgage in 5 years...
Use this calculator to five-year-plan clearing your mortgage early:
http://www.moneysavingexpert.com/mortgages/mortgag...
Good luck.
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