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Northern Rock offering a loan at lower interest rate
My brother has a loan with Northern Rock and has had a phone call from them saying that they have a special deal that they are offereing to "3 people a month" to reduce their interest rate from 6.5% to 5.7% by replacing the existing loan with a new one. Apparently there will be no redemption penalties for the old loan being paid off early. They are posting him details.
He sounded quite interested, but I'm not so sure.
I have heard that there are some new changes to the way banks calculate interest rates which must be introduced in a month or so, so I'm wondering if they are on a sales drive to get new loans set up before then. There's also the rule of 78 mentioned in one of Martins articles which I don't fully understand but which sounds like his past repayments may not reduce the amount owed if he repays the existing loan now (to take out the new loan).
Am I right to be suspicious?
He sounded quite interested, but I'm not so sure.
I have heard that there are some new changes to the way banks calculate interest rates which must be introduced in a month or so, so I'm wondering if they are on a sales drive to get new loans set up before then. There's also the rule of 78 mentioned in one of Martins articles which I don't fully understand but which sounds like his past repayments may not reduce the amount owed if he repays the existing loan now (to take out the new loan).
Am I right to be suspicious?
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Comments
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An easy way to compare the two is to add up all the payments remaining on the current loan. Then add up all the repayments he would make on the new loan.
The lowest total is the best loan to go with
Warning ..... I'm a peri-menopausal axe-wielding maniac0
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