Fixed Rate or Tracker for FTB

K

kinky76

Guest
I know this is similar to a current thread already ongoing, but I'm in a bit of a different situation, I'm a first time buyer in the middle of sorting out my first mortgage and trying to make the decision whehter I should go for a fixed or tracker mortgage. The best fixed rate I'm seeing that applies is a 3 year fixed at 5.45%, it was 5.25% yesterday and changed today :(

The best tracker I can get is ECB +1.2 so also 5.45%. Really struggling as to what I should do. Had set myself on going fixed until the recent increase and now unsure. Like the stability to the fixed especially as a lot of people are talking about some interest rate rises before a possible drop, but worried about what will be available after the fixed term ends, especially with a lot of people talking about the death of the tracker. One thing I will have going for me if I fix is that my LTV will then be under 80% after the fixed term ends. Trying to make my decision today so any advice would be much appreciated...

Thanks.
 
Do you really need to fix? What will your mortgage repayments be compared to your net disposable income? What will your other major regular outgoings come to? Only fix if you really need to for cashflow reasons otherwise stick with a competitive tracker rate.
 
Thanks ClubMan, nice to have your respected opinion. To be honest money isn't really tight and I could afford some rises, was just thinking fixed would save me a bit in the short term in hopes I could get on a similar tracker in the future if desired.
 
Fixing to save money over a competitive tracker usually doesn't work in the long run. A competitive tracker will usually win out on costs and flexibility. If you can afford to deal with future rate/repayment fluctuations then you might be better off not fixing. Try "stress testing" the mortgage by seeing what the repayments would be if rates increased by a few percent. See Karl Jeacle's mortgage calculator for example.
 
kinky76 said:
One thing I will have going for me if I fix is that my LTV will then be under 80% after the fixed term ends.
Thanks.
Click to expand...

Your assuming house prices won't fall any further then?

Tracker of ecb plus 1.2 is pretty good if your LTV is over 80% - I don't think any lenders are offering that anymore.
 
I actually do think house prices are most likely going to drop a bit further, however I do think I've got a pretty good price on the property. This is a long term investment for us and although a first time buyer this is a four bed house in the Rathfarham area and somewhere we could stay for the long term.

We're also at a stage where we've been patiently looking for a house for close to a year now and have kept a good eye on things and have really found a house we like.

We've saved a pretty good size deposit and want to start looking into extending the family and throwing rent away in a tiny one bed apartment is just starting to put us off.
 
By the way totally agree after lots of looking that the 1.2% tracker is pretty good with an LTV over 80%.
 
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