Tracker or fixed-rate remortgage?

Wednesday, 03 December 2008 09:42

A reader is coming to the end of a fixed-rate deal and wants to know whether to remortgage with a tracker or another fixed rate mortgage.

Tony Davis, mortgage expert from Mortgage Meadow, takes her through the problem and what it means to her finances.

Clare asks:

I’m coming to the end of my two-year fix. I have about 50% equity. What is better: a tracker mortgage or fixed rate mortgage?

Tony replies:

There are many other factors to take into account before being able to advise you personally on the best product to take.

Speaking generally, in the current climate a floating rate will probably offer the best saving in the short term if, as many are predicting, we are going to see further reductions in base rate.

What is happening now, is that lenders are reluctant to lend and they are pricing both their fixed and tracker rates accordingly.

I would suggest the starting point would be to see what your rate will revert to at the end of the existing fixed rate, it will likely be less than five per cent, in which case, you could do worse than remaining on that rate for the first few months of 2009 and see if the lenders thirst for lending improves to the point when rates are truly attractive and then take advantage of the products that are out there.

Register yourself with a mortgage broker that will track rates on your behalf.

If you have a question for Tony, go to the Ask the Mortgage Expert section.“>

Or for more information or mortgage advice go to Mortgage Meadow.

Mortgage Meadow is an independent mortgage broker and is authorised and regulated by the Financial Services Authority

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