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  • FIRST POST
    • Rizzo1987
    • By Rizzo1987 13th Aug 19, 6:48 PM
    • 2Posts
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    Rizzo1987
    Negative interest rates
    • #1
    • 13th Aug 19, 6:48 PM
    Negative interest rates 13th Aug 19 at 6:48 PM
    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
Page 1
    • pramsay13
    • By pramsay13 13th Aug 19, 6:58 PM
    • 797 Posts
    • 1,185 Thanks
    pramsay13
    • #2
    • 13th Aug 19, 6:58 PM
    • #2
    • 13th Aug 19, 6:58 PM
    Yes no problem, why not take out 10 mortgages on the same property?
    • MeenaM
    • By MeenaM 13th Aug 19, 7:14 PM
    • 288 Posts
    • 504 Thanks
    MeenaM
    • #3
    • 13th Aug 19, 7:14 PM
    • #3
    • 13th Aug 19, 7:14 PM
    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 "
    Pot 11. #199Next£1170Barclays Credit Card £4891.20/0- 0% ends April 2019 virgin 0% ends july 2020£4138£0AA Credit Card £860 0- 0% ends Dec 2017 Sainsburys Credit Card £521.27-0 EF£800/£1000 virgin2 £6,800£0MBNA £10,200£2,062total debt £27,527.47 paid off £25,465.47, debt free journey began Nov 2017
    • minimike2
    • By minimike2 13th Aug 19, 7:16 PM
    • 2,087 Posts
    • 1,573 Thanks
    minimike2
    • #4
    • 13th Aug 19, 7:16 PM
    • #4
    • 13th Aug 19, 7:16 PM
    Banks are not in the business of lending money at a negative interest rate. You are confusing two very different things.
    • Thrugelmir
    • By Thrugelmir 13th Aug 19, 8:03 PM
    • 63,972 Posts
    • 56,578 Thanks
    Thrugelmir
    • #5
    • 13th Aug 19, 8:03 PM
    • #5
    • 13th Aug 19, 8:03 PM
    Banks are not in the business of lending money at a negative interest rate.
    Originally posted by minimike2
    A Danish bank is currently offering such a product.
    “The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
    • amnblog
    • By amnblog 13th Aug 19, 8:33 PM
    • 11,272 Posts
    • 4,522 Thanks
    amnblog
    • #6
    • 13th Aug 19, 8:33 PM
    • #6
    • 13th Aug 19, 8:33 PM
    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.
    • getmore4less
    • By getmore4less 13th Aug 19, 9:20 PM
    • 36,901 Posts
    • 22,745 Thanks
    getmore4less
    • #7
    • 13th Aug 19, 9:20 PM
    • #7
    • 13th Aug 19, 9:20 PM
    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.
    Last edited by getmore4less; 13-08-2019 at 11:45 PM.
    • buglawton
    • By buglawton 13th Aug 19, 9:31 PM
    • 8,560 Posts
    • 5,277 Thanks
    buglawton
    • #8
    • 13th Aug 19, 9:31 PM
    • #8
    • 13th Aug 19, 9:31 PM
    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.
    • davidmcn
    • By davidmcn 13th Aug 19, 10:33 PM
    • 12,460 Posts
    • 13,993 Thanks
    davidmcn
    • #9
    • 13th Aug 19, 10:33 PM
    • #9
    • 13th Aug 19, 10:33 PM
    Some had colors to stop the rate dropping to zero.
    Originally posted by getmore4less
    "Collars", probably?

    I've certainly seen index-tracking facility agreements where the definitions make clear that the interest never becomes a negative rate.
    • grumiofoundation
    • By grumiofoundation 14th Aug 19, 6:58 AM
    • 105 Posts
    • 105 Thanks
    grumiofoundation
    Banks are not in the business of lending money at a negative interest rate. You are confusing two very different things.
    Originally posted by minimike2
    https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage
    • foxy-stoat
    • By foxy-stoat 14th Aug 19, 7:50 AM
    • 4,766 Posts
    • 2,827 Thanks
    foxy-stoat
    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
    Originally posted by Rizzo1987
    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.
    • minimike2
    • By minimike2 14th Aug 19, 9:36 AM
    • 2,087 Posts
    • 1,573 Thanks
    minimike2
    "In reality, the Jyske mortgage borrower in Denmark is likely to end up paying back a little more than they borrowed, as there are still fees and charges to pay to compensate the bank for arranging the deal, even when the nominal rate is negative."

    The banks all have collars on the trackers these days including some varied terms on old lifetime rates. There is not going to be a situation where people are paid for having a mortgage.
    • Brock_and_Roll
    • By Brock_and_Roll 14th Aug 19, 9:47 AM
    • 967 Posts
    • 966 Thanks
    Brock_and_Roll
    Most (sensible) Nordic banks have a "zero lending floor" (and part of the reason is that many of their old systems cant handle the concept of negative rates as it was never envisaged when these systems were set up)
    • bigstevex
    • By bigstevex 14th Aug 19, 5:31 PM
    • 851 Posts
    • 385 Thanks
    bigstevex
    The woolwich rings a bell, there's got close to zero, I think there was something in the T&Cs about the lowest it could go so it didn't go negative. We nearly took one out with them back in 2007, quite gutted we didn't
    • Rizzo1987
    • By Rizzo1987 14th Aug 19, 8:06 PM
    • 2 Posts
    • 0 Thanks
    Rizzo1987
    Thanks for all the responses, yes it was the Dutch news that caught my eye. I wonder if their property prices have risen as a result.
    • Dandytf
    • By Dandytf 14th Aug 19, 8:45 PM
    • 2,205 Posts
    • 511 Thanks
    Dandytf
    "Collars", probably?

    I've certainly seen index-tracking facility agreements where the definitions make clear that the interest never becomes a negative rate.
    Originally posted by davidmcn
    That's similar to my Nationwide tracker which I think never drops below 1.4% approx asa don't have the details in front of me
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