Splitting between fixed and tracker

[Daniel]

Just wondering what are thoughts on splitting the mortgage say 50/50 or 60/40 between fixed and tracker ?
Am first time buyer and trying to get the head around the whole rates etc.. From what I can see rates are going to increase within the next few ECB meetings so would like to fix now while rate might be slightly better.

Will be getting mortgage of c.365k. Was thinking of going maybe 60% fixed(5yrs) and remainder tracker to allow lump sum repayments if able. I think it might work out better over the next few years rather than going tracker for the whole amount.

What are the main things I should be considering ?

 

[ClubMan]

Do you really need to fix some or all of your mortgage? Are you hard pressed top meet the mortgage repayments or would you be if rates increased by a few percent? If not then just go for the most competitive tracker rate for your situation. See the best buys forum for latest rates/offers. There are lots of other existing threads on the whole fixed versus tracker/variable question and also a few on split fixed/variable-tracker mortgages too.

 

[Daniel]

No would be able to meet the repayments for tracker alright. I just feel with the likely increases in rates that are due would the fixed be a prudent option for the next 3-5 yrs

Is my thinking right ?

 

[ClubMan]

Don't fix (in part or full) in an attempt to time the markets, second guess the institutions and save money long term. If you fix then you will most likely pay a premium for the convenience and the peace of mind that fixed repayments give you. You need to figure out if you think that the likely cost justifies the benefits. Note also that fixed rates are inflexible in that early/accelerated repayment will incur fixed rate term breakage penalties (e.g. if you come into some money and want to clear/reduce the mortgage, you want to remortgage with a cheaper lender or you move house/mortgage). If you could easily afford your repayments if rates went up by a few percent then I would advise you to think seriously about going 100% tracker/variable. To estimate the interest costs involved in various different mortgage and repayment scenarios use Karl Jeacle's mortgage calculator.