I am about to get a mortgage and and considering a tracker at 2.99% (+0.249 for the life of the mortgage) so APR is 3.1% vs a fixed rate mortgage with set up cost of £999 which is fixed for 5 years at 2.79% then reverts to 4.74% giving an APR of 4.1%.
What I can't work out is that my mortgage will be for 21 years so on the fixed rate mortgage when the 5 years is up and it reverts to 4.74% (based on today's rates) this is obviously no where near as good as the 2.99% of the tracker so I would probably look to switch to a tracker or better mortgage but this would need to be for 16 years so if I found another tracker at +0.249%) for 16 years would this be more per month than if I had stayed on the tracker at +0.249% for the full 21 years?
I know this is all theory as no one knows what he rates will be in 5 years time but I need to base my decision on what I know now which are today's rates.
What I can't work out is that my mortgage will be for 21 years so on the fixed rate mortgage when the 5 years is up and it reverts to 4.74% (based on today's rates) this is obviously no where near as good as the 2.99% of the tracker so I would probably look to switch to a tracker or better mortgage but this would need to be for 16 years so if I found another tracker at +0.249%) for 16 years would this be more per month than if I had stayed on the tracker at +0.249% for the full 21 years?
I know this is all theory as no one knows what he rates will be in 5 years time but I need to base my decision on what I know now which are today's rates.