Graz

Just looking into a remortgage as our current one lapsed onto standard variable rate a while back and I really should change it as it is losing us money monthly.

There seem to be so interesting lifetime tracker mortgage deals around at the moment and was wondering if they were worthwhile?

Best of the bunch seems to be First Direct at 2.13% (i.e. 1.63% above base) but does have a hefty £2000 arrangement fee. If we stuck with it for the remaining 16 years of the mortgage we'd easily recoup the fee but if we switched after say 5 years as the base rate has subsequently gone up and there was a better fixed rate deal then we'd be better on the HSBC 2.49% tracker as it only has a £300 fee.

In the short term fixed deals seem better as Norwich and Peterborough have a two year fixed at 1.99% with a £300 fee. This does mean you have to be vigilant and switch your mortgage when the fixed term is up otherwise you get landed with the SVR.

Quite like the idea of not having to faff around every few years to get a new deal and you have all the other fees and costs to contend with i.e. valuation, land registry, etc.

Any SNet financial gurus (or anyone else) what to offer some advice? Don't worry, I'll check it over with someone who really does know what they're doing before committing

john banks

It really depends on your circumstances and views, as well as costs and penalties related to the deal.

I have just taken a two year fix, fee free from my existing lender at 2.59, which is the same as variable that just ran out and was to reset to 3.99. The variable deal was higher, but with a fee could have had a better rate, but the total amount payable over two years with the fee was more. In other borrowing that will last for 10 years I would have liked to have fixed for the whole 10 years, but even the five year fixed rates were much more expensive than variable, and the protection I really wanted was from years 6-10, although interest rate rises then will have much less of an effect as the vast majority of the payments by then will be capital rather than interest.

Once there is a hint of rates rising you will likely have missed the boat to gain from one, whereas a very long term fix now could appear terrible value but may only play out over the term.