Tracker or fix
Posted: July 9th, 2023, 12:23 am
Hi all,
I don't have the best track record with mortgage interest rates! 4.5 years ago, I was sure that Brexit was going to make interest rates shoot up, so I fixed for 5 years at 2.19%.
Fast forward to now. The 2.19% fix hasn't been a complete disaster, but in hindsight wasn't the best decision. I have been overpaying by just less than double the mortgage payment each month for the last couple of years though, so the balance is starting to come down.
I'm thinking that my best move for Feb 2024 onwards is to go on a tracker with my current provider (Nationwide). My reasoning is:
* I'm not really worried about monthly payments going up too much if interest rates keep going up (in fact, I have just increased my overpayment standing order so that it overpays by almost 200% (i.e. I'll be paying £3k per month, when the payments only need to be just over £1k per month)
* I'd love to move house. I'm ok with where I live, until the noisy neighbour starts playing his music very loudly on a nice sunny afternoon when I just want to get on with some peaceful gardening...and therefore being able to move penalty-free works for me.
* The ability to overpay is important (although, it's interesting looking back at the paperwork for the 2019 fix that my overpayment allowance is 10% of my original loan i.e. the balance when I first moved to Nationwide in 2017, rather than 10% of the amount that I fixed for 5 years from 2019 onwards, so if I fix again, I might keep an overpayment allowance equivalent to 10% of the 2017 mortgage balance).
* I'll be on something like 26% LTV at the point of product transfer, so should be able to get the best deals.
* I can fix at any time when I either lose my nerve with interest rates rising or feel that the rates offered are more palatable.
Am I missing anything? I know the product fees are a consideration, but that's something to deal with at the time.
Thanks everyone!
Bee
I don't have the best track record with mortgage interest rates! 4.5 years ago, I was sure that Brexit was going to make interest rates shoot up, so I fixed for 5 years at 2.19%.
Fast forward to now. The 2.19% fix hasn't been a complete disaster, but in hindsight wasn't the best decision. I have been overpaying by just less than double the mortgage payment each month for the last couple of years though, so the balance is starting to come down.
I'm thinking that my best move for Feb 2024 onwards is to go on a tracker with my current provider (Nationwide). My reasoning is:
* I'm not really worried about monthly payments going up too much if interest rates keep going up (in fact, I have just increased my overpayment standing order so that it overpays by almost 200% (i.e. I'll be paying £3k per month, when the payments only need to be just over £1k per month)
* I'd love to move house. I'm ok with where I live, until the noisy neighbour starts playing his music very loudly on a nice sunny afternoon when I just want to get on with some peaceful gardening...and therefore being able to move penalty-free works for me.
* The ability to overpay is important (although, it's interesting looking back at the paperwork for the 2019 fix that my overpayment allowance is 10% of my original loan i.e. the balance when I first moved to Nationwide in 2017, rather than 10% of the amount that I fixed for 5 years from 2019 onwards, so if I fix again, I might keep an overpayment allowance equivalent to 10% of the 2017 mortgage balance).
* I'll be on something like 26% LTV at the point of product transfer, so should be able to get the best deals.
* I can fix at any time when I either lose my nerve with interest rates rising or feel that the rates offered are more palatable.
Am I missing anything? I know the product fees are a consideration, but that's something to deal with at the time.
Thanks everyone!
Bee