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The “Have Your Cake & Eat It” Mortgage


The biggest issue for borrowers in these uncertain times is the question around interest rate rises. To be fair, even the self-confessed great economic minds and the Bank of England Monetary Policy Committee themselves are split on the issue.

For some, rates will not change for another 12 months, others say they will rise slowly but surely by the end of this year, whilst yet another section believe rates will have to rise a lot quicker than expected next year even though this will cause more than a fair share of wailing and gnashing of teeth.

For the sake of trying to find some kind of consensus amidst the madness, a sensible approach of gradual rate rises over the next 18 months seems a fair call.

The good news is that one lender has had the foresight to tap into this consensus view and release a competitive product that allows borrowers to get the best of both worlds. This 5 year product begins life as a highly competitive 2 year tracker at just 1.79% above Bank Base, giving a current pay rate of 2.19%. The beauty of the product is that after 2 years, right when many expect rates to be rising even further, you switch onto a fixed rate at a more than reasonable 4.44% for the remaining 3 years, ( 5.5% APR).

This 5 year tracker and fixed product is also available on an offset basis for just another 0.2% loading. Offsets are rare on fixed rates as it is so this product really is pretty unique on the market at present.

All of this does compare favourably with other products and gives a known quality where the fixed rate is concerned, whilst those who actually come to remortgage in 2 years time could find that rates are substantially higher at that time. Of course there is much speculation and conjecture over where rates will be in 2 years time, but for those who are looking for some element of future security this looks to be a very interesting option.

For those who are happy to take more of a risk where rates are concerned you can still obtain a discounted variable rate as low as 1.99%, (2.9% APR), whilst tracker products with no penalties are available at just 2.35%, (2.40% APR).

Straight forward fixes start at 2.79%, (4.20% APR) for 2 years, 3.59% (4.80% APR) for 3 years and 4.38% (4.70% APR) for 5 years.

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