Long-term tracker mortgages 'may work out cheaper'
29th May 2012
People on the hunt for a new mortgage may want to consider a long-term deal, as these may provide better value, one expert has advised.
Ray Boulger, senior technical manager at the independent mortgage adviser John Charcol, said that good cases can be made for either a tracker or a fixed-rate. With people buying new property, the likelihood is that in most cases they are going to be staying in that property for several years.
He said that two-year fixed-rates do not offer an "awful lot" of value because the bank rate is unlikely to move much in the next two years and may not move at all.
For this reason, best value is likely to come from either a lifetime tracker or a five-year fixed mortgage, he explained.
"I suspect that a tracker will work out cheaper in the next five years because I think that all the signs are that even when the bank rate starts to go up, it is going to go up quite slowly," Mr Boulger said.
He added that some people like the comfort of knowing exactly what their biggest monthly payment is going to be for several years.
It does come down very much to human psychology as to which is better," the expert stated.
Posted by Staff Writer: Ewan Robertson
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