Should I stick with my tracker or move to a cheaper fix?
Falling mortgage rates has left many people wondering: should I stick with my tracker or move to a cheaper fix?
David Hollingworth of L&C Mortgages says that the choice between sticking with a tracker or moving to a fix depends on your individual circumstances and risk appetite.
If you are comfortable with the potential for your monthly payments to increase in the future, then a tracker mortgage could be a good option for you. Tracker mortgages typically track the Bank of England base rate, so your monthly payments will go up if the base rate increases.
However, if you want to fix your monthly payments for a period of time, then a fixed-rate mortgage could be a better option for you. Fixed-rate mortgages are available for a variety of terms, such as 2, 5, and 10 years.
Ultimately, the decision of whether to stick with a tracker or move to a fix is a personal one. There is no right or wrong answer, and the best decision for you will depend on your individual circumstances.
If you are unsure which type of mortgage is right for you, it is a good idea to speak to a qualified financial advisor.
Factors to consider when making a decision:
- The current interest rate environment
- Your risk tolerance
- Your financial goals
Advantages of tracker mortgages:
- Lower interest rates than fixed-rate mortgages
- Monthly payments that can decrease if the base rate decreases
- Flexibility to move to a fixed-rate mortgage at any time
Disadvantages of tracker mortgages:
- Monthly payments that can increase if the base rate increases
- Less predictability in monthly payments
- Potential for negative equity if the value of your property falls
Advantages of fixed-rate mortgages:
- Fixed monthly payments for a period of time
- Peace of mind knowing that your monthly payments will not increase
- Protection against rising interest rates
Disadvantages of fixed-rate mortgages:
- Higher interest rates than tracker mortgages
- Early repayment charges if you want to move to a different mortgage deal
- Less flexibility than tracker mortgages
Conclusion
The decision of whether to stick with a tracker or move to a fix is a personal one. There is no right or wrong answer, and the best decision for you will depend on your individual circumstances. If you are unsure which type of mortgage is right for you, it is a good idea to speak to a qualified financial advisor.
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