- Level of savings to handle unexpected payment shocks.
- Level of current debts and how well managed they are.
- Level of income over expenditure.
- Future earnings expectations.
- Future commitments.
- Future plans to move within the product term.
- Likelihood of lender offering a follow-on product.
- Credit profile.
- Desire to extend the term to lower the monthly payments.
- Consider an interest-only mortgage (subject to qualification criteria) as an interim measure before switching back to capital and interest.
Once these have been considered, clients can make an informed choice and elect to go for a tracker mortgage should they feel comfortable with that.
If there are any doubts, then a fixed rate may be more appropriate, despite the fact it will cost you more.
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Ultimately, the expected trajectory of future rates is the biggest factor when making the decision about whether to fix or not.
The markets are pretty certain that rates are going up, but if you don’t think they’re going to rise too high, and are happy with the risk, then a tracker or discounted variable rate mortgage is definitely something to be discussed with a broker.
Bob Singh is founder of Uxbridge-based Chess Mortgages
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