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My down payment was £70k, interest rate is 2.14% When I renew at end of year it shoul be around 1.1%

• balfirevic 6y ago
  Well damn, I don't think there is anything below 3.00% (3.50% more common) where I live. That's nominal - 3.5% - 4.0% is the effective interest rate. I don't know much about mortgages, so not sure if I'm missing something. Congrats on your place - it looks great!
  • dahfizz 6y ago
    Is that right? I think inflation makes the effective interest rate lower than the nominal rate. You could imagine that inflation pays ~1% of your mortgage for you because each dollar that you owe is becoming less and less valuable.
    • balfirevic 6y ago
      Effective interest rate is, to my understanding, not related to inflation. It's just a way to make loans with various compounding periods easily comparable (I'm mostly citing this from Wikipedia, I'm far from expert here: https://en.wikipedia.org/wiki/Effective_interest_rate https://en.wikipedia.org/wiki/Effective_interest_rate ) I just mentioned it for the sake of providing more information to whomever was reading my comment.
      • dahfizz 6y ago
        You're right, I confused effective and real rates. https://www.investopedia.com/articles/investing/082113/understanding-interest-rates-nominal-real-and-effective.asp https://www.investopedia.com/articles/investing/082113/under...