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Do the mortgages also have a negative interest rate or are they cappoed at 0?
by sharpneli 5y ago
Do the mortgages also have a negative interest rate or are they cappoed at 0?
- deleted 5y ago[deleted]
- razius 5y agoCapped at 0 and you pay all kinds of fees on top.
- dusted 5y agoSome actually do
- boublepop 5y agoYes, but there are costs associated which when included in calculations brings them back up over zero.
- jopsen 5y agoI was looking at mortgage for a house, paying 30% upfront, so I would only need to borrow 500k USD. At fixed rate 30yr, it was 1% + some fees.. so total cost of the loan over 30 years would be 35k USD. The flex interest rate (adjusted every 5 years) was a current rate -0.25 + fees. In total that would cost around 10k USD over 30 years. (Of course with flexible interest rates, the rates could go up). So I think most of the cost is now just fees... Looking at owning vs. renting it's quite competitive.
- burlesona 5y agoThis doesn’t seem like the right math for a mortgage. Are you saying it was a 1% simple interest loan? Because if so, that’s astonishing. I’ve only ever heard of compound interest mortgages.
- jopsen 5y agoHmm, I might have read the numbers incorrectly. I probably need to read up a bit more...
- wodenokoto 5y agoLast time I looked, the interest is negative if you get a mortgage that floats. However, they’ll add some fees that are also a percentage of the remaining loan, so that you are in effect are still paying interest. So no, it is not capped, but the interest has to become even lower before the interest on your Mortgage helps pay itself off.
- Hamuko 5y agoIn Finland we apparently used to have mortgages that were just Euribor + bank margin, meaning that if the Euribor rate went enough into the negative, the bank would be paying you interest. These days mortgages are capped though. My mortgage rate is MAX(Euribor 12m, 0%) + 0.5%. Unsurprisingly I have never paid more than 0.5% interest.
- ZephyrBlu 5y ago0.5% interest is insanely cheap.
- tonyedgecombe 5y agoBut the houses aren't.
- ZephyrBlu 5y ago0.5% interest makes houses cheap in relative terms. You get a lot of leverage for basically nothing.
- tonyedgecombe 5y agoI don't know about Finland but where I am house prices have gone up as interest rates have gone down.
- sharpneli 5y agoYeah. It’s only fair as the interest on accounts is at 0% in Finland. If they would bring negative interest to normal acocounts they’d likely have to do the same with mortgages. Bringing it to euribor + margin.