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Zero Interest Mortgage Launched !

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Guardian

Leeds building society has launched a mortgage with a "zero" interest rate for the first six months.

The deal, thought to be the first of its kind in the UK, would cut a borrower's monthly payments by hundreds of pounds during the first few months, freeing up cash for home improvements, furniture or other spending, the lender said.

The deal is available on a three- or five-year fix and gives customers the option of paying no interest for the first three or six months.

The interest rate paid after that will depend on the chosen interest-free period and how long the borrower chooses to fix. The three-year fix starts at 3.79%, with three months at 0%, and the five-year fix at 4.23%

During these months the customer will still have to pay off the capital, and the interest they do not pay at the beginning will be added into the later payments. But the initial payments will be considerably lower than if they had opted for a standard deal.

More fishes caught in the net. Anyone thinking rates are rising any time soon are kidding themselves - this game is rumbling on for years.

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Guardian

More fishes caught in the net. Anyone thinking rates are rising any time soon are kidding themselves - this game is rumbling on for years.

For example, for someone borrowing £300,000 and opting for a five-year fix with a 0% interest period for six months, the initial monthly payment would be £1,000 compared with £1,715 on the standard version of the Leeds 90% five-year fixed-rate mortgage. In this example, the customer would have effectively saved a total of £4,293 over the six months, which they could use to carry out improvements, for example. But after six months the £1,000 payment would rise to £1,803.

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So spend, spend, spend is the advice. Anything but pay down debt of course.I suggest the punters use the 'savings' to buy hallucagenic drugs. May help them feel at ease if this crackpot perverse economy.

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Probably cheaper to pay the interest from the start and take out a shorter term loan for those must have extras, such as a new kitchen and double glazing*

*my landlord gave me a new kitchen last year and double glazing all around last month.

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But the interest gets added on after? So its not 6 months interest free, its 6 months of reduced payments.

Would the deferred interest take account of the amount they paid off the capital in those first 6 months I wonder?

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For example, for someone borrowing £300,000 and opting for a five-year fix with a 0% interest period for six months, the initial monthly payment would be £1,000 compared with £1,715 on the standard version of the Leeds 90% five-year fixed-rate mortgage. In this example, the customer would have effectively saved a total of £4,293 over the six months, which they could use to carry out improvements, for example. But after six months the £1,000 payment would rise to £1,803.

Overall cost difference over the 5-year fix period:

No interest free option overall total cost for the £300k borrowed: £1,715 x 60 = £102,900

6 month interest free option overall cost: (£1,000 x 6) + (£1,803 x 54) = £103,362

Difference of £462. Buying a mortgage on tick is more expensive, just fancy that!

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Overall cost difference over the 5-year fix period:

No interest free option overall total cost for the £300k borrowed: £1,715 x 60 = £102,900

6 month interest free option overall cost: (£1,000 x 6) + (£1,803 x 54) = £103,362

Difference of £462. Buying a mortgage on tick is more expensive, just fancy that!

Negative Amortization mortgages worked so well for Americans, didn't they?

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Clearly 'Gorgeous Mark' Carney, in his role as head of the regulator, must think this is a bonzer idea.

Throw in Gidiot's 5% down scheme and they're definately back off to the races.

Wait for yields to come off the recent spike, get yourself a long term fix and buy a house.

This is happening.

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Clearly 'Gorgeous Mark' Carney, in his role as head of the regulator, must think this is a bonzer idea.

Throw in Gidiot's 5% down scheme and they're definately back off to the races.

Wait for yields to come off the recent spike, get yourself a long term fix and buy a house.

This is happening.

What's 'a long term fix' though? Anything less than you could clear the mortgage in and you're playing with fire imo. [edit and even then you're banking on not being dragged backwards by real term decreasing wages, the longer the fix, the greater the risk]

Do you see real wages rising anytime soon?

Edited by cheeznbreed

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Clearly 'Gorgeous Mark' Carney, in his role as head of the regulator, must think this is a bonzer idea.

Throw in Gidiot's 5% down scheme and they're definately back off to the races.

Wait for yields to come off the recent spike, get yourself a long term fix and buy a house.

This is happening.

Really?

Isn’t it weird? How many of us want to get extraordinary rewards — live the life, be able to buy drinks for our friends without worrying about cost, travel whenever we want, stay at amazing hotels, eat out at amazing restaurants — but we take the most conventional routes possible?

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0% interest £2k fee.....we want you to take our debt, we will entice you with lots of freebies to take our debt.

0% only means the amount of debt that can be taken on has reach its highest peak for the masses or unsustainable going forward..........only the few with surplus to flash who feel it in their interest to invest will invest in property........no good investing in property if both the state and the masses can't or won't pay a return.

Hey Ho and away we go. ;)

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What's 'a long term fix' though? Anything less than you could clear the mortgage in and you're playing with fire imo.

Do you see real wages rising anytime soon?

A long term fix is 2 years. Nothing should be taken for granted after May 2015. Prior to that anything can happen if Osborne and Carnage are prepared to shrug off the consequences of another sovereign debt downgrade.

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The fees seem to be the commision for the deal, the interest is done at more or less cost.

totally sustainable for a bank to lend 25 years worth for an upfront fee of £2K.

All those staff to pay and no money coming in...

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A long term fix is 2 years. Nothing should be taken for granted after May 2015. Prior to that anything can happen if Osborne and Carnage are prepared to shrug off the consequences of another sovereign debt downgrade.

I used to feel the same about the 2010 election...

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Negative amortisation comes to the UK? What does the FSA/FCA have to say?

Is this actually negative amortization, or is it a 'genuine' interest free loan for 6 months? I did my fag-packet calc based on the assumption that interest was not accruing during the first six months (i.e. that the outstanding balance at the end of the five year fix would be identical in both cases).

Is one a 25 year mortgage, and the other a 24.5 year mortgage for £6k less, which you get in advance by paying £6 x £1k instalments?

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Well that looks like the top is in for low interest rates then. Perhaps it could be pushed to negative rates?

-0.5% interest rates for 6 months, we pay you to take out the mortgage

£2500 fee (commission) payable in advance. ;)

Tax payer guarantee when the bank fails.

Guaranteed negative equity in 6 months.

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A long term fix is 2 years. Nothing should be taken for granted after May 2015. Prior to that anything can happen if Osborne and Carnage are prepared to shrug off the consequences of another sovereign debt downgrade.

Yes another bull deciding to buy...

OK so why not 10 year fix now? Deals available for <4% and we plan to clear the mortgage in that time. There's a lot to be said for knowing exactly how much is going out each month.

Yes anything could happen and while Osbourne and Carney might claim to be determined to keep rates low for as low as possible, I'm not sure they will be able to for that long.

After years of waiting, a great house has come up in our area and our offer was accepted below valuation. Best non fee-paying school catchment in Scotland, so while not immune to HPC, the area is highly resistant. It's the right decision for us at our stage in life. Possibly a least-worst decision as I still think things are going to get 'tricky'.

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Yes another bull deciding to buy...

OK so why not 10 year fix now? Deals available for <4% and we plan to clear the mortgage in that time. There's a lot to be said for knowing exactly how much is going out each month.

If we find somewhere that will accept a price we're willing to pay (the last 2.5 years experience don't make that look likely) then I'd consider a 10 year fix. Or potentially a fee-free, no lock-in tracker and keep a close eye on the money markets, when you start to see the long-term fixes being pulled then lock-in

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If we find somewhere that will accept a price we're willing to pay (the last 2.5 years experience don't make that look likely) then I'd consider a 10 year fix. Or potentially a fee-free, no lock-in tracker and keep a close eye on the money markets, when you start to see the long-term fixes being pulled then lock-in

lock in that debt....of course, in a market where prices are based on debt affordability, the most you are going to lock in is a capital loss.

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lock in that debt....of course, in a market where prices are based on debt affordability, the most you are going to lock in is a capital loss.

You missed reading the first sentence of my post...

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lock in that debt....of course, in a market where prices are based on debt affordability, the most you are going to lock in is a capital loss.

Genuine question - how long are you prepared to wait for prices to get to where you think they should be (% less than current)? Ie when do you see the housing market not based on debt affordability and what will change this? The can-kicking is already longer than any of us anticipated.

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Yes another bull deciding to buy...

OK so why not 10 year fix now? Deals available for <4% and we plan to clear the mortgage in that time. There's a lot to be said for knowing exactly how much is going out each month.

Yes anything could happen and while Osbourne and Carney might claim to be determined to keep rates low for as low as possible, I'm not sure they will be able to for that long.

After years of waiting, a great house has come up in our area and our offer was accepted below valuation. Best non fee-paying school catchment in Scotland, so while not immune to HPC, the area is highly resistant. It's the right decision for us at our stage in life. Possibly a least-worst decision as I still think things are going to get 'tricky'.

Yeh, I'm buying soon. Saw a mortgage advisor this week and will be borrowing £300k at 3.69% for 5 years.

5 years which i intend to overpay by the 'allowed' 10% each year (how nice of them to allow me to overpay what they've leant me, albeit with limits :lol: )

I've come to the conclusion that a HPC will not be allowed to happen. too many people have too much debt for the short, sharp crash i've been waiting 8 years for.

There's nothing in my market (Exeter plus 5 miles) I'd consider living in at the levels i expected to buy in at (around 30% lower than current prices) but hey ho, I'm throwing caution to the wind and will be subscribing to the Daily Express so I can cheer rising prices from my already over-priced, 'long-term' house.

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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