Stick, fix or track?

In recent weeks, low fixed rate deals have disappeared of the mortgage lenders’ shelves, only to be replaced with considerably less favourable rates, particularly for those with only a small deposit to offer.

With the certainty that the Bank of England base rate can only go one way, taking mortgage rates with it, many people are reluctant to sign up to tracker deals. first direct appears to have addressed this concern with an offset tracker mortgage which is capped at 4.99% until 2012.

The product tracks the bank of England base rate plus 2.48% for the life of the loan, meaning that the rate offered is currently 2.98% (3.2%APR).

Jimmy Kelly, Mortgage Manager for first direct said:

“We wanted customers to be able to take advantage of the current low base rate and offer the security of knowing that their mortgage rate won’t go above 4.99% for the next three years. It’s great to be able to offer this unique mortgage at the moment with the added benefits of being able to offset.”

However, the mortgage does come with a few difficult requirements and an expensive sting in its tail. The deal is only available to new customers and they must be able to offer a deposit of at least 25%, so with falling house prices wiping out many people’s equity, it is likely that few people will qualify for the deal. For those that can scrape together the deposit – a whopping £50,000 on a typical £200,000 house – there is also a £1,499 an arrangement fee.

If you are confused about which mortgage product represents the best deal for you, talk to TotallyMoney.com. Just head over to http://www.totallymoney.com/mortgages/ and complete your details to be put in touch with a mortgage expert who will produce a quote that is perfectly tailored to your needs.