Mortgage Types - What would you choose and why? POLL

[Digsy]

If I could get on a tracker now I'd get one like a shot, but the setup fees are running into four figures for what would potentially be a very short-lived product. Also the base rate physically can't come down much more now. If I did manage to get on a tracker, I'd probably discipline myself to pay an excess to get myself used to the expenditure I'd be experiencing when the rates inevitably went back up. Same goes for a discounted mortgage, although these aren't linked dircectly to the base rate, but to the lender's SVR.

 

 

I think the biggest issue at the moment is that althoutgh as the headlines go house prices are dropping at "the fastest rate evarrr" they actually havn't dropped very far yet. Back in the late 80s, a typical property in my region lost about 33% of its value in a very short space of time. It then took over a decade to recover that value. Now, properties are worth between 300% and 400% of what they were back in the late 80s, but the recent drop only accounts for about 10% of that value. The numbers are huge because the values of the properties are huge, but if the current drop turns out to be as big in % terms as the 80s crash, then someone signing up to buy a home that was worth £250k last year might get it for £220k now. Next year it might be only worth £170k. Negative equity is a very real possibility for that kind of situation, and it could take many years to recover. I'd have difficulty in signing up for a very long term mortgage now unless I was mortgaging a very small % of my property's actual value (i.e. I was protected against negative equity).

 

 

I'm paying my lender's SVR now, plus I've gone interest only until I can see what is going to happen to the market. OK, I'm not paying off anything at the moment, but I'm paying about £200 less per month that six months ago, plus I can do absolutely whatever I want with my payments. For me the flexibility in these uncertain times is worth far more than getting the absolute lowest monthly payment I possibly could.