So on the table I have two options one with a fixed rate and one at a variable rate. There's a difference of over £100 between the two which makes it very tempting to go with the variable rate but its a fixed 3yr deal and who knows whats going to happen with interest rates in that time? Any thoughts? Suggestions? All much appreciated

Hi Sarah,

Without fully understanding your circumstances it is difficult to give you advice, but I can give you some general things to consider in making a decision.

The main question is are you willing to pay a premium for the certainty of a fixed rate, or would you prefer a cheaper rate that has an element of risk.

I would suggest you look at the tracker option, see what it will cost you now, and then do some calculations assuming a 1%, 2% & 3% rise in interest rates. If payments at this level would be uncomfortable, then perhaps the fixed rate is a better option, however if you would have no problems what so ever with the rate increases and you can afford the risk then it may be worth while considering the tracker. Ultimately the decision is yours, and as I said above, without conducting a full factfind I can't really advise.

On a side not, is this what your current lender is offering you? If so, havbe you shopped around? As there may be lower rates elsewhere.

I would suggest contacting an independent mortgage broker to see what alternatives are available before you make a decision.

i have a small £40'000 mortgage, which i would like to pay off in 10yr term. i was thinking of a 10yr fixed for peace of mind or a tracker and risk it going slowly ??

Sarah B wrote:
So on the table I have two options one with a fixed rate and one at a variable rate. There's a difference of over £100 between the two which makes it very tempting to go with the variable rate but its a fixed 3yr deal and who knows whats going to happen with interest rates in that time? Any thoughts? Suggestions? All much appreciated


Hi Sarah, as with anything, talk to an adviser who could really get into details with you. But I suggest that you go with the fixed rate as markets are very volatile now. If it helps, you can go to http://Mortgagebroker.org.uk for help

DanAronG wrote:
Hi Sarah,

Without fully understanding your circumstances it is difficult to give you advice, but I can give you some general things to consider in making a decision.

The main question is are you willing to pay a premium for the certainty of a fixed rate, or would you prefer a cheaper rate that has an element of risk.

I would suggest you look at the tracker option, see what it will cost you now, and then do some calculations assuming a 1%, 2% & 3% rise in interest rates. If payments at this level would be uncomfortable, then perhaps the fixed rate is a better option, however if you would have no problems what so ever with the rate increases and you can afford the risk then it may be worth while considering the tracker. Ultimately the decision is yours, and as I said above, without conducting a full factfind I can't really advise.

On a side not, is this what your current lender is offering you? If so, havbe you shopped around? As there may be lower rates elsewhere.

I would suggest contacting an independent mortgage broker to see what alternatives are available before you make a decision.

thanks for these Dan, great advice as usual!

enerally, a good tip for choosing a mortgage is that the more money the borrower has at his or her disposal, whether this is in savings, bonuses or an expected windfall, the more the customer should opt for a flexible type of mortgage, whether this is one or the other.

A flexible remortgage is one that retains the borrower’s power to pay off lump sums off the mortgage loan. The borrower could save thousands of pounds on interest rates over the mortgage period.


Furthermore, if the interest rates do go up, the borrower will not feel the pinch, since the overall mortgage loan has been reduced in this way, and the interest payments with it.


Thanks
Mortgage Loan Officer Career