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Fixed rate - or trackers?

CHOOSING whether to go for a fixed rate or tracker mortgage has not been an easy decision over the last few years.

On the one hand, with the Bank of England interest rate having been at rock bottom for more than two years, tracker mortgage rates have looked good value. But the downside of a tracker deal is that once the Bank of England rate starts to rise again - as it must do at some stage - so too will your mortgage payments.

Fixed rate deals on the other hand continue to be the safe option for anyone who needs absolute certainty that their mortgage payments are not going to rise. But there's a premium to be paid for this safety - and with some fixed rate deals sitting at as much as 1% above the best tracker deals, it can be tempting to take a risk on the lower rate and hope that rates don't rise.

If you've only got a small mortgage, taking that risk might be worth it. But we always advise people to think about whether they could afford their mortgage if rates were to rise by 3%. Although that is an incredibly unlikely turn of events - it can help focus your mind when you're thinking about taking a risk.

If you're on a tight budget and you need the certainty of your payments staying the same, then a fix is probably your best option.

There's no right answer to whether you should fix or go for a tracker, but a professional mortgage broker will be able to point out which deals work out best in terms of fees, and bonuses - such as free legals and valuations.

For most people, their mortgage is the biggest financial commitment, so it's well worth taking some time to make sure you get the right deal each time you come to remortgage.

To find out how we can help you call 0207 138 4693, lines open Monday-Friday 9am-5pm. To find out how the Which? Group could help you with your mortgage, visit http://www.whichmortgagehelp.co.uk James Daley, Money Editor, Which?
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Title Annotation:Features
Publication:Liverpool Echo (Liverpool, England)
Date:Oct 22, 2011
Words:350
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