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    • Timo1984
    • By Timo1984 15th Oct 16, 1:01 PM
    • 2Posts
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    Timo1984
    Natwest 3.9% loan with 5% savings account?
    • #1
    • 15th Oct 16, 1:01 PM
    Natwest 3.9% loan with 5% savings account? 15th Oct 16 at 1:01 PM
    I just got a letter from Natwest this morning inviting me to borrow up to £25000 at 3.9% interest... My question is if it's possible to take this loan and dump it in a 5% savings account, would this be like free money? Or am I missing something?
Page 1
    • YorkshireBoy
    • By YorkshireBoy 15th Oct 16, 1:16 PM
    • 28,346 Posts
    • 16,145 Thanks
    YorkshireBoy
    • #2
    • 15th Oct 16, 1:16 PM
    • #2
    • 15th Oct 16, 1:16 PM
    You're missing many things. So many I don't have time to list them all.

    But I'll give you three to start with:

    You won't have £25K...you'll have an average of £12.5K over whatever duration you choose, because there will be monthly repayments to make from the amount borrowed.

    Where's the "5% savings account" taking that amount?

    The "invitation" is just that...an invitation to apply. You may not get £25K and you may not get 3.9% APR. Unless it clearly displays something along the lines of "pre-approved" or "guaranteed"?
    • colsten
    • By colsten 15th Oct 16, 4:40 PM
    • 8,150 Posts
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    colsten
    • #3
    • 15th Oct 16, 4:40 PM
    • #3
    • 15th Oct 16, 4:40 PM
    Where's the "5% savings account" taking that amount?
    Originally posted by YorkshireBoy
    I'd like to know that as well
    • TheShape
    • By TheShape 15th Oct 16, 7:55 PM
    • 453 Posts
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    TheShape
    • #4
    • 15th Oct 16, 7:55 PM
    • #4
    • 15th Oct 16, 7:55 PM
    I think this would have been possible at some time in the past if you'd managed to open multiple Nationwide FlexDirect and TSB Classic Plus accounts, although you may have needed additional accounts with a partner to have a £25k balance.

    If you didn't have enough balance available in those, you could have had one or more Club Lloyds accounts at 4% for part of the balance.

    With the option to hold multiple accounts diminished and rates reducing you wouldn't find enough places to put the money.

    I think the principle is sound. I suppose it's 'stoozing' from a loan rather than a credit card.
    • MissTasmanian
    • By MissTasmanian 15th Oct 16, 9:15 PM
    • 608 Posts
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    MissTasmanian
    • #5
    • 15th Oct 16, 9:15 PM
    • #5
    • 15th Oct 16, 9:15 PM
    With the assumption you're not already using 5% saving accounts I suppose it's conceivable but hardly worth it just break even.

    If you take less than the full amount you can have £2500 in a flex account and £2000 in a TSB account and start to fill up some 5% regular savers of which there are four currently which works out as £1300 a month into a 5% regular saver. So you'll just about break even but as soon as you start filling your accounts you'll start running out of money from the loan that you'll have repaid.
    • colsten
    • By colsten 16th Oct 16, 12:35 AM
    • 8,150 Posts
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    colsten
    • #6
    • 16th Oct 16, 12:35 AM
    • #6
    • 16th Oct 16, 12:35 AM
    I think the principle is sound.
    Originally posted by TheShape
    Only slight problem with it is that it's a fantasy.
    • colsten
    • By colsten 16th Oct 16, 12:44 AM
    • 8,150 Posts
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    colsten
    • #7
    • 16th Oct 16, 12:44 AM
    • #7
    • 16th Oct 16, 12:44 AM

    If you take less than the full amount you can have £2500 in a flex account and £2000 in a TSB account and start to fill up some 5% regular savers of which there are four currently which works out as £1300 a month into a 5% regular saver.
    Originally posted by MissTasmanian
    Can you explain how you would handle interest rate drops and other changes to T&Cs? Such as e.g. the ones forthcoming for TSB.

    Also, where would you keep the funds that wait to be fed into the Regular Savers, and how would you handle the loss you would make whilst the funds can't be in the Regular Savers?

    So you'll just about break even
    Originally posted by MissTasmanian
    Are you certain of that?
  • jamesd
    • #8
    • 16th Oct 16, 2:33 AM
    • #8
    • 16th Oct 16, 2:33 AM
    I just got a letter from Natwest this morning inviting me to borrow up to £25000 at 3.9% interest... My question is if it's possible to take this loan and dump it in a 5% savings account, would this be like free money? Or am I missing something?
    Originally posted by Timo1984
    Two issues:

    1. NatWest will probably refuse to lend when they ask you the purpose of the loan and you honestly tell them.

    2. You can't put that amount in savings accounts and get that interest rate. But it's easy to get perhaps 10% after bad debt before tax from peer to peer lending via places like Ablrate and MoneyThing and I'm doing that myself with stoozed credit card money. Some of the loans available are amortising and that will help with the capital repayment part of your own loan. For the rest you can often get loans with suitably matching terms either initially or on the secondary loan markets.

    So good idea but it'll need a bit of tweaking to work well.
    • MissTasmanian
    • By MissTasmanian 16th Oct 16, 12:20 PM
    • 608 Posts
    • 262 Thanks
    MissTasmanian
    • #9
    • 16th Oct 16, 12:20 PM
    • #9
    • 16th Oct 16, 12:20 PM
    Can you explain how you would handle interest rate drops and other changes to T&Cs? Such as e.g. the ones forthcoming for TSB.

    Also, where would you keep the funds that wait to be fed into the Regular Savers, and how would you handle the loss you would make whilst the funds can't be in the Regular Savers?

    Are you certain of that?
    Originally posted by colsten
    Yesterday I worked out with some rough maths that you could about break even here's my working:

    So the 1st month you'd have £2500 Nationwide account, £2000 TSB account, £500 Nationwide account, £300 First Direct, £250 x2 from M&S and HSBC.

    So you'd have a total of £5800 saved at 5% the first month. He could either take a smaller loan of £10,000 and continue to break even with 5% savers despite a small loss in the first month or take the full amount of £25,000 but use 3% savers. I suggest three bank of Scotland accounts and two Tesco current accounts

    So the first month:

    £19200 at 3%
    £5800 at 5%

    I don't know what his repayments would be but if it's £1000 a month just pay that money from the 3% savers.

    So the first month assuming he uses all the accounts currently variable he'll still make a small loss but from now on with the increasing amount in his 5% savers he'll bubble along breaking even (I am including the TSB rate drop) and then around month 4 start to make a profit. Again assuming no more rate drops.

    If I am bored later it might be fun to work out the optimal loan amount to take for maximum profit.
    • YorkshireBoy
    • By YorkshireBoy 16th Oct 16, 12:40 PM
    • 28,346 Posts
    • 16,145 Thanks
    YorkshireBoy
    If I am bored later it might be fun to work out the optimal loan amount to take for maximum profit.
    Originally posted by MissTasmanian
    If you can get all of it, all of the time, in 5% paying accounts, and you can benefit from the PSA, the profit for a year is £3.20 per £1,000 borrowed.
    • Timo1984
    • By Timo1984 16th Oct 16, 2:39 PM
    • 2 Posts
    • 0 Thanks
    Timo1984
    Haha, sounds like it's not even worth the time of trying to figure it out. I knew nothing about this whole business so thank you all so much for the enlightenment
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