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Negative interest rates

edited 30 November -1 at 1:00AM in Mortgages & Endowments
15 replies 1.2K views
Rizzo1987Rizzo1987 Forumite
2 posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
Hi all,

I've just fixed for 10 years, I am wondering, if the crazy world of negative interest rates ever did hit the UK, could I take out a second mortgage and use it to pay my normal mortgage?

Confused. All theoretical of course! But who knows
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Replies

  • pramsay13pramsay13 Forumite
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    Yes no problem, why not take out 10 mortgages on the same property?
  • MeenaMMeenaM Forumite
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    Debt-free and Proud!
    Im not sure you would get a second mortgage merely to pay off the first but you could remortgage , if you did check there are no penalties for coming out of the fixed term early

    what interest rate have you currently got?

    I do not think mortgage rates can ever be "negative "
    paid off £27,527.47 debt free journey began Nov 2017 DEBT FREE 13.09.2019!! EF £3500/£5000
  • minimike2minimike2 Forumite
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    Banks are not in the business of lending money at a negative interest rate. You are confusing two very different things.
  • ThrugelmirThrugelmir Forumite
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    minimike2 wrote: »
    Banks are not in the business of lending money at a negative interest rate.

    A Danish bank is currently offering such a product.
    “Markets have been so good for so long, that many investors are trivialising the advanatages of actively managing portfolio risk" - Gervais Williams
  • amnblogamnblog Forumite
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    Danish base rate is -0.4% and I believe this product pays back 0.5% pa (-0.5%).

    There are charges that make the product profitable for the Lender however.

    I imagine funds available on that basis will lead to swiftly rising property prices.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • edited 14 August 2019 at 12:45AM
    getmore4lessgetmore4less Forumite
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    edited 14 August 2019 at 12:45AM
    Some lenders had lifetime base - x% trackers when rates were higher.
    They came unstuck when rates dropped to 0.25%.

    Some had collars to stop the rate dropping to zero.
  • buglawtonbuglawton Forumite
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    I did hear a 1st hand story that when BoE dropped base rate to lowest ever in last 50 years after the '08 crash, a friend of a friend was receiving a monthly payment into their account for their base rate linked mortgage.
  • davidmcndavidmcn Forumite
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    Some had colors to stop the rate dropping to zero.
    "Collars", probably?

    I've certainly seen index-tracking facility agreements where the definitions make clear that the interest never becomes a negative rate.
  • grumiofoundationgrumiofoundation Forumite
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    minimike2 wrote: »
    Banks are not in the business of lending money at a negative interest rate. You are confusing two very different things.

    https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage
  • foxy-stoatfoxy-stoat Forumite
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    Rizzo1987 wrote: »
    Hi all,

    I've just fixed for 10 years, I am wondering, if the crazy world of negative interest rates ever did hit the UK, could I take out a second mortgage and use it to pay my normal mortgage?

    Confused. All theoretical of course! But who knows

    Yeah probably not going to help you, but if they ever did then everyone in the UK would be able to put all the banks out of business by borrowing money.
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