With the base rate at 0.5% which to choose - tracker or fixed rate mortgage?
Choosing between a fixed rate and tracker mortgage.
Making the right mortgage choice can save you thousands of pounds over your mortgage term, and getting it can wrong could cost you dearly.
With your mortgage likely to be your largest financial commitment, it is crucial to make the right decision.
Tracker mortgage choice.
Trackers are linked to the BoE base rate. Your rate is set a fixed amount above base, it increases and decreases in line with base rate movements.
The Pros
- If rates stay low you will pay less interest each month.
- If the base rate falls your repayments fall too.
The Cons
- Repayments can change according to base rate movements.
- Higher element of risk - repayments will rise if the base rate increases.
- Budgeting can prove more difficult if rates rise.
Who suits a tracker?
If you willing to accept some risk for lower payments then a tracker mortgage might be right for you. If your rate increases you need to factor in higher monthly repayments.
Fixed rate mortgage choice.
The Pros
- Fixed monthly payments for the duration of the deal.
- Ability to accurately budget.
- Protection from rate increases during the agreed term.
- Lower risk product offering increased security and peace of mind.
The Cons
- No benefit if market rates fall.
Who suits a fixed rate?
Risk averse home-owners, if you are on a tight budget with a fixed rate you know your monthly mortgage payments will not increase.
Before making any decision call Deal Direct for independent mortgage advice.
Call us on 0800 048 8828.
